nep-pol New Economics Papers
on Positive Political Economics
Issue of 2023‒01‒02
fifteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. The Political Costs of Austerity By Gabriel, Ricardo Duque; Klein, Mathias; Pessoa, Sofia
  2. Strategyproofness and Proportionality in Party-Approval Multiwinner Elections By Th\'eo Delemazure; Tom Demeulemeester; Manuel Eberl; Jonas Israel; Patrick Lederer
  3. Revealed in transition: The political effect of planning's legacy By Natchov, Timur V.; Pyle, William
  4. Trust as state capacity: The political economy of compliance By Timothy Besley; Sacha Dray
  5. Hidden hostility: donor attention and political violence By Siwan Anderson; Patrick Francois; Dominic Rohner; Rogerio Santarrosa
  6. Sending peace home?! The effect of political favoritism on conflict By Andreas Kammerlander; Kerstin Unfried
  7. Trusted Institutions and Policy Compliance: Evidence from COVID-19 Mobility Patterns in Korea. By Hee-Seung Yang; Sungjin Kim
  8. Political representation in the wake of ethnic violence and post-conflict institutional reform: Comparing views from Rwandan and Burundian citizens By Bert Ingelaere; Réginas Ndayiragije; Marijke Verpoorten
  9. Political Economy and Moral Philosophy:Some (I hope) useful notes By Giuseppe Travaglini
  10. Belief polarization and Covid-19 By Ambrocio, Gene; Hasan, Iftekhar
  11. Populists and Fiscal Policy: The Case of Poland By Maciej Wysocki; Cezary Wojcik; Andreas Freytag
  12. A Tale of Government Spending Efficiency and Trust in the State By António Afonso; João Tovar Jalles; Ana Venâncio
  13. The performance of politically connected firms in South East Europe: state capture or business capture? By Bartlett, Will
  14. Gendered Globalization: The Relationship between Globalization and Gender Gaps in Employment and Occupational Opportunities By Roll, Yoav; Semyonov, Moshe; Mandel, Hadas
  15. Approval voting versus proportional threshold methods: so far and yet so near By Susumu Cato; Stéphane Gonzalez; Eric Rémila; Philippe Solal

  1. By: Gabriel, Ricardo Duque (Bonn Graduate School of Economics and Department of Economics, University of Bonn); Klein, Mathias (Research Department, Central Bank of Sweden); Pessoa, Sofia (Bonn Graduate School of Economics and Department of Economics, University of Bonn)
    Abstract: Using a novel regional database covering over 200 elections in several European countries, this paper provides new empirical evidence on the political consequences of fiscal consolidations.To identify exogenous reductions in regional public spending, we use a Bartik-type instrument that combines regional sensitivities to changes in national government expenditures with narrative national consolidation episodes. Fiscal consolidations lead to a significant increase in extreme parties’ vote share, lower voter turnout, and a rise in political fragmentation. We highlight the close relationship between detrimental economic developments and voters’ support for extreme parties by showing that austerity induces severe economic costs through lowering GDP, employment, private investment, and wages. Austerity-driven recessions amplify the political costs of economic downturns considerably by increasing distrust in the political environment.
    Keywords: Fiscal policy; Austerity; Voting behavior; Political economy
    JEL: D72 E62 H53
    Date: 2022–11–01
  2. By: Th\'eo Delemazure; Tom Demeulemeester; Manuel Eberl; Jonas Israel; Patrick Lederer
    Abstract: In party-approval multiwinner elections the goal is to allocate the seats of a fixed-size committee to parties based on the approval ballots of the voters over the parties. In particular, each voter can approve multiple parties and each party can be assigned multiple seats. Two central requirements in this setting are proportional representation and strategyproofness. Intuitively, proportional representation requires that every sufficiently large group of voters with similar preferences is represented in the committee. Strategyproofness demands that no voter can benefit by misreporting her true preferences. We show that these two axioms are incompatible for anonymous party-approval multiwinner voting rules, thus proving a far-reaching impossibility theorem. The proof of this result is obtained by formulating the problem in propositional logic and then letting a SAT solver show that the formula is unsatisfiable. Additionally, we demonstrate how to circumvent this impossibility by considering a weakening of strategy\-proofness which requires that only voters who do not approve any elected party cannot manipulate. While most common voting rules fail even this weak notion of strategyproofness, we characterize Chamberlin--Courant approval voting within the class of Thiele rules based on this strategyproofness notion.
    Date: 2022–11
  3. By: Natchov, Timur V.; Pyle, William
    Abstract: Decades of investment decisions by central planners left communist societies with structures of production ill-prepared for competitive markets. Their vulnerability to liberalization, however, varied across space. Similar to the effects identified in the "China shock" literature, we hypothesize that post-market-shock outcomes will reflect pre-marketshock structures of production. Tracking voting outcomes at the district level in Russia's presidential elections, we document asymmetric reactions to the liberalization of markets in 1992. Electoral support for the pro-market incumbent declined most in areas with structural inheritances that made them most vulnerable to reforms. This finding sheds new light on an old debate about the importance of "initial conditions" (as opposed to policies) to the trajectories of post-communist societies.
    Keywords: industrial structure,transition economy,voting,Russia
    JEL: N14 N44 P00 P23
    Date: 2022
  4. By: Timothy Besley; Sacha Dray
    Abstract: This paper explores the link between trust in government, policy-making, and compliance. It focuses on a specific channel whereby citizens who are convinced that a policy is worthwhile are more motivated to comply with it. This in turn reduces the government's cost of implementing a policy and may also increase the set of feasible policies. Thus, state capacity is greater when citizens trust their government. The paper discusses alternative approaches to modelling the origins of trust, especially the link to the design of political institutions.
    Keywords: State capacity, Trust, Compliance, Political economy, Policy
    Date: 2022
  5. By: Siwan Anderson; Patrick Francois; Dominic Rohner; Rogerio Santarrosa
    Abstract: Political violence is a worldwide problem that has been on the rise over the past decade. The international dimension of domestic repression and dissent is a particularly relevant factor yet surprisingly understudied. In particular, governments that heavily depend on foreign aid may crack down on political opponents when donors are distracted by major domestic events. In reaction, the opposition may have incentives to reduce agitations to incite such crackdowns. We study this interaction in a simple strategic model and empirically test the predictions using fine-grained data for Africa.
    Keywords: Political violence, Riots, Natural disasters, Elections, Foreign aid
    Date: 2022
  6. By: Andreas Kammerlander (University of Freiburg); Kerstin Unfried (Bernhard-Nocht-Institute for Tropical Medicine)
    Abstract: Bringing the model by Choi (2014) to a spatial context, we investigate and assess the link between political favoritism and internal conflict. In particular, we compare the difference in the likelihood and intensity of conflict between regions in which citizens reside that belong to identity groups of political leaders and others over time in a global sample. Combining geo-coded conflict data with self-gathered information on the birthplaces and ethnic affiliation of 836 political national leaders and using a two-way fixed effects model with region and country-year fixed effects, we find that regions experience 10% fewer casualties while they constitute the birth region of the national leader in autocracies. We also find evidence for ethnic favoritism. Our analysis indicates that autocratic leaders use political favoritism (in armed forces) and other coup-proofing strategies to remain in power that reduce the intensity of conflict in their homelands.
    Keywords: political favoritism, identity politics, conflict, geo-data
    JEL: D72 R11
    Date: 2022–12
  7. By: Hee-Seung Yang (Yonsei University); Sungjin Kim (Yonsei University)
    Abstract: This study examines the role of trusted institutions and political orientation in people’s tendency to comply with COVID-19-related preventive measures. Using data on public transportation mobility and political orientation in the Seoul metropolitan area, we show that political messages on quarantine success downplayed the severity of the virus and, thus, hindered policy compliance during the major waves of COVID-19 in 2020 – 2021. Individuals with high institutional trust align their mobility behavior with the government’s messaging, feeling safe and engaging more in social activities. Additional channels come from the area’s occupation and industry classifications, mainly through remote work availability.
    Keywords: political orientation; political message; mobility; social distancing; policy compliance; COVID-19.
    JEL: I18 O18 J08 R11 D72
    Date: 2022–11
  8. By: Bert Ingelaere; Réginas Ndayiragije; Marijke Verpoorten
    Abstract: The lack of political representation often lies at the origin of identity-based violence, and, when not resolved, can re-ignite violence. We study who perceives gains and losses in political representation in Rwanda and Burundi and why. We rely on a quantitative and qualitative analysis of over 700 individual life histories that cover the period 1985-2015.
    Keywords: political representation, Violence, Rwanda, Burundi, Legitimacy, Post-conflict
    Date: 2022
  9. By: Giuseppe Travaglini (Department of Economics, Society & Politics, Università di Urbino Carlo Bo)
    Abstract: Political Economy, as an autonomous discipline, has a relatively recent history. From its origins, it appears to be divided into two fields, the “classical†one based on the labor- value theory, and the “neoclassical†one at the center of which is the utility-value theory. Our aim in this paper is to identify some relevant philosopher strands in economic thought that can help to disentangle the reciprocal relationships between the different economic theories, and to understand their relations with philosophy, and particularly with Moral philosophy. This can make it easier to study political economy, its social and political implications, and the not always simple relationship of the economic theory with social disciplines.
    Keywords: political economy; moral philosophy; welfare economics; social justice
    JEL: B00 B10 B40
    Date: 2022
  10. By: Ambrocio, Gene; Hasan, Iftekhar
    Abstract: We document a remarkable increase in economic belief polarization - disagreement - regarding the future state of the economy across Europe during the Covid-19 pandemic. We find evidence suggesting that belief polarization may have impeded the implementation of pandemic response measures such as social distancing and teleworking as well as policies providing economic support. We find an association between belief polarization on the one hand and trust in the press, fake news, political polarization, and possibly also inequality on the other. These results indicate that belief polarization, by hindering the implementation of crisis response policies, may be one channel which could amplify the negative effects of large or unusual crises.
    Keywords: Polarization,consumer survey,Covid-19
    JEL: E23 E66 E71 I12
    Date: 2022
  11. By: Maciej Wysocki (SGH Warsaw School of Economics); Cezary Wojcik (SGH Warsaw School of Economics, Center for Leadership, and CESifo); Andreas Freytag (Friedrich-Schiller-University Jena, University of Stellenbosch, CESifo, and STIAS)
    Abstract: The past decade has witnessed an increase in populist movements across the world. Some of those movements have gained strong political support and formed populist governments promising new sets of economic and fiscal policies. This raises the pertinent policy question: how do such populist governments influence fiscal policy outcomes? We approach this question by looking at the case of Poland which according to several recent studies has experienced the highest level of populist rhetorics in recent years. Indeed, when the new populist government took power, between 2015-2019, Poland experienced a major social and fiscal policy shifts: the new government decreased the statutory retirement age despite sever aging problem and launched one of the biggest social programs in Europe which resulted in sharp increase in political support for the government. In the paper we provide some first evidence of the impact of such policies on fiscal outcomes. Our analysis reveals that fiscal sustainability parameters have significantly deteriorated sharply after 2015 when the new government undertook populist policies, despite the fact that current (observable) deficit and debt levels remained stable. Specifically, our estimates suggest that just after a year since the introduction of the new fiscal program, the strength of reaction of the primary balance to a change of the public debt decreased by nearly 50% in 2017 and the parameter turned negative and statistically insignificant thereafter which means that from 2018 fiscal policy lacked long-term sustainability. Overall, our estimations show that in the period of 2016-2019 fiscal sustainability parameters were the lowest since Poland joined the EU in 2004. While our analysis has several limitations, the case of the populist government in Poland provides some early evidence that populists do have negative impact on long-term fiscal sustainability.
    Keywords: fiscal sustainability, fiscal and social policy, populism
    JEL: C22 E60 H63
    Date: 2022–12–07
  12. By: António Afonso; João Tovar Jalles; Ana Venâncio
    Abstract: This paper empirically links the efficiency and performance assessment of the general government, proxied by efficiency scores, to the trust in government. Government spending efficiency scores are first computed via data envelopment analysis (DEA). Then, relying on panel data and instrumental variable approaches, we estimate the effect of public sector efficiency on citizens trust on national governments. The sample covers 36 OECD countries between 2007 and 2019. We find that the more efficient countries in terms of government spending are Australia, Chile, Ireland, New Zealand, South Korea, Switzerland. Secondly, our main finding is that better public sector spending efficiency is positively associated with citizens’ higher trust in governments. In general, political economy variables and the existence of fiscal rules do not seem to significantly affect our measure of trust. Results were held using alternative proxies for public sector efficiency, specifications with different control variables and instrumental variables approaches.
    Keywords: government spending efficiency; DEA; panel data analysis; confidence effects; ideology; fiscal rules
    JEL: C14 C23 E44 G15 H11 H50
    Date: 2022–12
  13. By: Bartlett, Will
    Abstract: This paper investigates the effects of the political connectedness of private sector firms in South East Europe on their business performance. This question is relevant to contemporary ideas about the importance of “state capture” in the region, and the paper provides a new perspective on the nature and consequences of this phenomenon. On the basis of evidence from empirical survey data as well as case study evidence, the paper concludes that political connections tend to undermine the business performance of the connected firms, with a potential negative impact on the economic development of the countries concerned. It is argued that this process is better described as “business capture” rather than “state capture”. The terminology is important as it indicates the directions in which policy might be directed to effectively manage this issue and improve the competitiveness of economies in the region. The average overall negative effect on business performance measured by employment growth is substantial but is found to be statistically significant only the services sector and in countries of the Western Balkans. The EU member states of the region appear to be relatively immune from the negative effects of business capture.
    Keywords: politically connected firms; state capture; Southeast Europe
    JEL: L81 R14 J01
    Date: 2021–09–01
  14. By: Roll, Yoav; Semyonov, Moshe; Mandel, Hadas
    Abstract: Despite the steady increase in the number of women who join the labor force, there are still substantial cross-country variations in both women’s labor force participation and gender-linked occupational inequality. Utilizing micro-data from 47 countries (circa 2013) obtained from the Luxembourg Income Study, we examine the extent to which globalization and each of its three components (economic, social and political) affect gender-based economic inequality. In particular, we investigate the effect of globalization on two outcomes: women’s labor force participation and women’s relative odds of obtaining high-income, high-status jobs. The findings show, first, that social globalization is more consequential for gender inequality in the labor market than either economic or political globalization. Second, while social globalization increases women’s labor force participation, it reduces women’s relative odds of obtaining lucrative, high-status jobs. The findings are discussed in light of the comparative literature on gender-based inequality.
    Date: 2022–11–25
  15. By: Susumu Cato (UTokyo - The University of Tokyo); Stéphane Gonzalez (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Eric Rémila (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Philippe Solal (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper provides the first axiomatic characterization of a class of certification methods, dubbed proportional threshold methods, that builds on consistency properties across populations and profiles of binary opinions. We then compare proportional threshold methods with the approval voting method. We formally outline the similarities and differences of these two collective decision processes and provide an axiomatic characterization of the approval voting method that, perhaps surprisingly, is closely related to the one of the proportional threshold methods.
    Keywords: approval voting method,certification method,consistency,evaluation,monotonicity,proportional threshold method
    Date: 2022–11–17

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