nep-pol New Economics Papers
on Positive Political Economics
Issue of 2023‒04‒24
ten papers chosen by
Eugene Beaulieu
University of Calgary

  1. Lending cycles and real outcomes: costs of political misalignment By Bircan, Çağatay; Saka, Orkun
  2. Trust in the fight against political corruption: A survey experiment among citizens and experts By Benjamin Monnery; Alexandre Chirat
  3. A Modest Proposal for Preventing the Votes of People with Short Life Expectancy From Being a Long-Term Burden to Their Country By Arandjelović, Ognjen
  4. How Do Political Institutions Affect Sustainability? By C.Y. Cyrus Chu; Meng-Yu Liang
  5. Democracy in Political Corporate Social Responsibility: A Dynamic, Multilevel Account By Jennifer Goodman; Jukka Mäkinen
  6. Demographic and Political Transitions By Rédha Chaba; Michael T Dorsch; Victor Hiller; Paul Maarek
  7. Less but better? The influence of gender on political activity By Nicolas Fremeaux; Paul Maarek
  8. Anatomizing the invisible: moral philosophy and economics in Mandeville’s thought By Thiago Vargas
  9. Young Politicians and Long-Term Policy By Ricardo Dahis; Ivan de las Heras; Santiago Saavedra
  10. When do privatizations have popular support? A voting model By Rim Lahmandi-Ayed; Didier Laussel

  1. By: Bircan, Çağatay; Saka, Orkun
    Abstract: We document a strong political cycle in bank credit and industry outcomes in Turkey. In line with theories of tactical redistribution, state-owned banks systematically adjust their lending around local elections compared with private banks in the same province based on electoral competition and political alignment of incumbent mayors. This effect only exists in corporate lending and creates credit constraints for firms in opposition areas, which suffer drops in assets, employment and sales but not firm entry. Financial resources and factors of production are misallocated as more efficient provinces and industries suffer the greatest constraints, reducing aggregate productivity.
    JEL: D72 D73 G21 P16
    Date: 2021–10–04
  2. By: Benjamin Monnery; Alexandre Chirat
    Abstract: In Western democracies, the last decades are characterized by a transformation of the relationship between citizens and their representatives, towards greater accountability, transparency and anti-corruption efforts. However, such evolutions are sometimes suspected of paradoxically fueling populism and reducing political trust. In this article, we investigate to what extent a new public institution in charge of monitoring the integrity of elected officials is likely to attract popular support and restore citizens' trust in democracy. We focus on France and its main anti-corruption agency, the High Authority for the Transparency of Public Life (HATVP), launched in 2013. We run a survey among 3, 000 representative citizens and 33 experts, and augment it with an experimental treatment where we randomly provide simple, concise information on the activity and record of the HATVP. Our results first show a large divergence between the opinions of the average citizen and the much more optimistic views of experts about the state and dynamics of political integrity in France. Second, we find that citizens have highly heterogeneous beliefs and those with high political distrust are not only more likely to vote for populist candidates or abstain, but also the least informed about the anti-corruption agency. Third, our information provision experiment has meaningful, positive impacts on citizens’ perceptions of HATVP, political transparency and representative democracy. Moreover, we show that some of the largest impacts are found among initially distrustful and poorly informed citizens, stressing the potential for communication and information to change the political perceptions and attitudes of disillusioned citizens.
    Keywords: integrity ; corruption ; political trust ; populism ; survey experiment
    JEL: C99 D72 M48 P37
    Date: 2023
  3. By: Arandjelović, Ognjen
    Abstract: In response to the growing social discontent regarding what is perceived as generational injustice, due to younger generations of voters facing long-term negative consequences from issues disproportionately decided by the votes of older generations of voters, there have been suggestions to introduce an upper age voting threshold. These have been all but universally dismissed as offensive and contrary to basic democratic values. In the present article, I show that the idea is in fact entirely consonant with present-day democratic practices and far from without a precedent. Hence, I describe how the aforementioned generational injustice can be rectified using a simple vote-weighting scheme which is easy to implement and interpret. Lastly, I discuss the societal effects that this alteration of the voting system would have on the distribution of the origins of political power.
    Date: 2023–03–14
  4. By: C.Y. Cyrus Chu (Institute of Economics, Academia Sinica, Taipei, Taiwan); Meng-Yu Liang (Institute of Economics, Academia Sinica, Taipei, Taiwan)
    Abstract: In capturing the famous collapsing case of Easter Island, we set up a model where the society’s ruler has to allocate resources between consumption goods and statue construction. Since the incumbent rulers may be addicted to the glory or pleasure of statue erection, their utility function may be alienated from that of the citizens. We analyze how sustainability may differ under democracy and autocracy regimes. We prove that when the discount factor is small (large), the democracy regime is more sustainable (both regimes are equally sustainable). When the discount factor is somewhere in between, citizens’attitude toward state accountability plays a critical role. When citizens are “weak”, the threat of replacing a reckless ruler under democracy is not credible. We identify a narrow parameter range in which an autocrat has a strong self-discipline to prevent an environmental collapse, whereas the democracy regime performs worse.
    Date: 2023–04
  5. By: Jennifer Goodman (Audencia Business School); Jukka Mäkinen
    Abstract: Political corporate social responsibility (PCSR) calls for firms to implement and engage in deliberative democracy processes and structures, addressing governance gaps where governments are unwilling or unable to do so. However, an underlying assumption that the implementation of PCSR will enrich democratic processes in society has been exposed and challenged. In this conceptual article, we explore this challenge by developing a framework to reveal the dynamics of firms' deliberative democratic processes and structures (meso level), and those at nation state (macro level). Using existing cases as illustrative examples, we demonstrate that despite the public good premise of PCSR theory toward thickening the overall democracy in a society, corporate democratization at meso level can have the opposite effect and may actually erode macro-level democratic control of society and the economy. These findings imply a need for multilevel analysis in PCSR research and greater consideration of state-level public institutions and the responsibilities of business firms toward those institutions. Furthermore, we contribute to the PCSR literature by identifying the disruptive mechanisms
    Keywords: Political corporate social responsibility, Deliberative democracy, Democratic institutions, Democratic corporate governance
    Date: 2022–02–04
  6. By: Rédha Chaba (LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - Université Paris-Panthéon-Assas); Michael T Dorsch (CEU - Central European University [Budapest, Hongrie]); Victor Hiller (LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - Université Paris-Panthéon-Assas); Paul Maarek (LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - Université Paris-Panthéon-Assas)
    Abstract: This paper revisits the political economy of transitions to democracy. We build on the canonical rational choice model of democratization by introducing demography, arguing that the demographic structure of a society shapes the material incentives for a democratic movement. Young people can benefit from democratic improvements over a longer time horizon and may have a lower opportunity cost of participating in democratic movements. Hence, a rise in the youth ratio, during the demographic transition, is likely to open a democratic window of opportunity as the increasing threat of revolution might encourage an autocratic elite to concede more democracy. We test this prediction on two long country-year panel data sets containing detailed demographic data. Fixed-effects panel regressions demonstrate that an increase in the youth ratio is robustly associated with democratic improvements. The effect is particularly pronounced for "youth bulges" measured as the proportion of the population between the ages of 15 and 19 for which opportunity cost of revolting is substantially lower. Two distinct instrumental variable strategies, using lagged fertility rates in neighboring countries and past drought episodes, allow for a causal interpretation of this correlation. Furthermore, the effect of the youth ratio on democratic improvements is more pronounced during recessions suggesting that demographic and macroeconomic factors should be considered as complementary channels.
    Keywords: Youth bulge, Political transition, Democracy, Demography
    Date: 2023–03–20
  7. By: Nicolas Fremeaux (LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - Université Paris-Panthéon-Assas); Paul Maarek (LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - Université Paris-Panthéon-Assas)
    Abstract: In this article, we study gender differences in the quality of politicians. We analyze the activity (number of bills, amendments, reports, questions and interventions) and effectiveness (number of bills and amendments passed) of parliamentarians. We collected detailed data on the activity of French parliamentarians between 1993 and 2022. Using fixed-effect regressions and RDD strategies based on close elections, we do not find any systematic gender difference regarding activity except for the number of bills authored, which is lower for women. However, this difference is observed only for newcomers and fades after a few years, suggesting a behavioral explanation. Regarding effectiveness, female parliamentarians are more likely to have their amendments passed. This is probably due to the quality of their amendments, as women author fewer amendments with the sole objective of obstruction, are more often present for the vote on their amendments and bills, have a higher share of sponsored amendments and have a lower proportion of their amendments deemed inadmissible, which again suggests a behavioral explanation. On the other hand, women in the opposition party are less likely to have their bills passed than men in the opposition party. This is linked to discrimination within the party, which less often selects bills drafted by women to submit them to a vote.
    Keywords: gender, elections, lawmaking, French parliament
    Date: 2023–03–21
  8. By: Thiago Vargas (PHARE - Philosophie, Histoire et Analyse des Représentations Économiques - UP1 - Université Paris 1 Panthéon-Sorbonne)
    Abstract: Taking as its starting point the reception of the Fable of the Bees by the philosophers of the second half of the eighteenth century, this article seeks to examine which parts of Mandeville's system "bordered upon the truth" (Smith) and were therefore useful in contributing to the formation of the political economy of commercial societies. To this end, the article is divided into three parts that address crucial aspects of the Fable's moral philosophy: the quarrel over the refinement of the arts and its link with labour, trade, and inequality; the passions and the political foundation of society; and the manner in which interests are organised.
    Keywords: Mandeville, Adam Smith, Political economy, Moral philosophy, Commercial society, Political philosophy
    Date: 2021–07–30
  9. By: Ricardo Dahis; Ivan de las Heras; Santiago Saavedra
    Abstract: Policies often have costs today but benefits far into the future, especially climate change and environmental policies. A critical dimension in this trade-off is politicians’ age, which impacts their life expectancy, career concerns, and what education they receive. We study this trade-off in the case of Brazilian mayors and environmental outcomes, using close elections. We find that when a young politician is elected, there is a reduction in deforestation and greenhouse gas emissions without significant effects on municipal GDP. Our study of mechanisms suggests young mayors matter because they belong to a new cohort, not because of age per se.
    Keywords: Deforestation, Age
    JEL: P18 Q23 Q54
    Date: 2023–03–31
  10. By: Rim Lahmandi-Ayed (UR MASE - Modélisation et Analyse Statistique et Economique - ESSAIT - Ecole Supérieure de la Statistique et de l'Analyse de l'Information - Université de Carthage - University of Carthage); Didier Laussel (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We consider a general equilibrium model with vertical preferences, where workers and consumers are differentiated respectively by their sensitivity to effort and their intensity of preference for quality. We consider a public monopoly, i.e. which is owned equally by all individuals. The question is under which conditions the firm will be privatized and at which rate/price. The decisions are taken through majority vote in a plurality system. When the firm is controlled by the State, the price is determined through a vote among all the population. Otherwise, the price is the one which maximizes the profit. We prove that, when the maximum disutility of working in the firm is higher than the maximum utility of consuming its output, privatization may emerge as a possible choice of the majority, even if no hypothesis is made on the efficiency of a private management relative to a public one.
    Keywords: Democracy, General equilibrium, Privatization, Vertical preferences, Majority vote, Public monopoly
    Date: 2022–05

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