nep-pol New Economics Papers
on Positive Political Economics
Issue of 2024‒06‒24
fourteen papers chosen by
Eugene Beaulieu, University of Calgary

  1. Young versus Old Politicians in Local Politics By Baskaran, Thushyanthan; Hessami, Zohal; Schirner, Sebastian
  2. Panel study of Russian public opinion and attitudes (PROPA). Wave 1. Report By Aluykov, Maxim; Gilev, Aleksei; Vyrskaia, Marina; Rumiantseva, Aleksandra; Zavadskaya, Margarita
  3. Additive valence and the single-crossing property By Fabian Gouret
  4. The Political Economy of Industrial Policy By Juhász, Réka; Lane, Nathaniel
  5. Do politicians affect firm outcomes? Evidence from connections to the German Federal Parliament By Diegmann, André; Pohlan, Laura; Weber, Andrea
  6. When Do Politicians Appeal More Broadly? A Comment on Chin (2023) By Krūminas, Pijus; Čepėnas, Simonas; Darškuvienė, Valdonė
  7. Protests By Cantoni, Davide; Kao, Andrew; Yang, David Y.; Yuchtman, Noam
  8. Cities, Urbanization and Political Change By Dorward, Nick; Fox, Sean; Hoelscher, Kristian
  9. Adapting to the market: leftist ideological justifications of liberal economic policies, 1977-1986 By Crespi De Valldaura G, Virginia; Fifi, Gianmarco
  10. Estimating the Effects of Political Pressure on the Fed: A Narrative Approach with New Data By Thomas Drechsel
  11. Zombies Ahead: Explaining the Rise of Low-Quality Election Monitoring By Sunn Bush, Sarah; Cottiero, Christina; Prather, Lauren
  12. When Should Governments Listen to Social Protests? The Effects of Public Support and Outcome Favorability By Brummel, Lars; Toshkov, Dimiter
  13. Censorship in democracy By Marcel Caesmann; Janis Goldzycher; Matteo Grigoletto; Lorenz Gschwent
  14. Political economy of international sanctions By Gutmann, Jerg; Neuenkirch, Matthias; Neumeier, Florian

  1. By: Baskaran, Thushyanthan (Ruhr University Bochum); Hessami, Zohal (Ruhr University Bochum); Schirner, Sebastian (Ruhr University Bochum)
    Abstract: Do young politicians prioritize other types of municipal spending than old politicians? We study this question using hand-collected candidate-level data on municipal elections (1996-2020), along with detailed administrative data on municipal spending in Bavaria. Our identification strategy makes use of within-party candidate-level races for marginal seats. Our findings indicate that municipalities with a higher proportion of young councilors allocate more resources to social spending. Further analysis reveals that this social spending increase is primarily driven by the expansion of public child care. Exploring mechanisms, we find evidence suggesting that young councilors affect policy choices in- directly through between- and within-party bargaining.
    Keywords: young and old politicians, political selection, municipal spending, local councils
    JEL: D72 D78 H70 H72 J13 J14
    Date: 2024–05
  2. By: Aluykov, Maxim (King's College London); Gilev, Aleksei; Vyrskaia, Marina; Rumiantseva, Aleksandra; Zavadskaya, Margarita (University of Helsinki)
    Abstract: The first wave of the Panel Study of Russian Public Opinion and Attitudes (PROPA), conducted between March 13 and March 21, 2024, offers a comprehensive insight into the political and economic sentiment among Russian citizens. Run via an online survey involving 4, 757 participants, the study presents nuanced perspectives on the economic conditions, electoral integrity, and political landscape of Russia. The participants, all Russian residents 18 years old and older, completed the survey in 22 minutes on average, with incentives such as gift certificates. The demographic is slightly skewed towards younger women. Respondents with higher education were over-represented in the sample due to the nature of the online survey method. Responses indicate generally positive perceptions of the state of the economy. Al- though responses suggest a somewhat critical view of personal economic situations in the context of the war, with a significant number of respondents unable to afford expensive goods like cars, they manage day-to-day expenses successfully. This sentiment is crucial, as it underscores the prevailing economic discontent that is strongly correlated with voting strategies. Political support remains strong for President Vladimir Putin, with 71% expressing approval. However, this support does not indicate a unanimous support for the ongoing war in Ukraine, with only 43% of respondents claiming to support the war in response to a direct question. Our findings do not suggest noticeable presence of any preference falsification among the respondents recruited through online marketing panels when it comes questions about the war. The tension reveals a complex interplay of support and dissent, which is particularly pronounced between gender lines. The perceived legitimacy of election presents a dichotomy: while a significant majority consider the electoral processes fair, there is also a noticeable skepticism towards electoral malpractice, suggesting a reluctant acceptance of the status quo by many. Despite the high official records for Putin in the elections, the survey results suggest a disparity, with only 54.8% of the respondents supporting Putin. This difference points to the potential dissatisfaction not reflected in the official figures. Moreover, the acceptance of workplace mobilization and other electoral malpractice suggests a decline in citizens’ standards of free and fair elections. At the same time, respondents express balanced view on media where they get the news. Finally, most of the respondents answering the questions regarding Russia’s future expect their country to be strong and prosperous, while economic prosperity tend to be relatively more demanded than any kind of geopolitical greatness. Pessimists as well tend to focus more on future economic hardships.
    Date: 2024–05–21
  3. By: Fabian Gouret (CY Cergy Paris Université, THEMA)
    Abstract: To enhance the realism of the spatial model of voting, several authors have added a valence parameter into a Downsian utility function. However, when doing so, they rarely discuss the value that the exponent on the distance between voters and candidates should take. For some values of the exponent and the valence- advantage of one candidate over another one, the single-crossing property cannot be assumed. This paper underscores the importance of this consideration by providing first a necessary and sufficient condition for this property not being satisfied. I then discuss the identification of the key parameters in two econometric frameworks to realize various hypothesis tests related to the single-crossing property. I use data from pre-election surveys of the American National Election Studies. I mainly focus on the 2008 Presidential election, and find some evidence against the single-crossing hypothesis. I also discuss the results with more recent US Presidential elections, but it is more difficult to find evidence against this hypothesis.
    Keywords: spatial models of voting, valence, single-crossing property, survey
    JEL: D72 C81
    Date: 2024
  4. By: Juhász, Réka; Lane, Nathaniel (University of Oxford)
    Abstract: We examine the ways in which political realities shape industrial policy through the lens of modern political economy. We consider two broad “governance constraints”: i) the political forces that shape how industrial policy is chosen and ii) the ways in which state capacity affects implementation. The framework of modern political economy suggests that government failure is not a necessary feature of industrial policy; rather, it is more likely to emerge when countries pursue industrial policies beyond their governance capacity constraints. As such, our political economy of industrial policy is not fatalist. Instead, it enables policymakers to constructively confront the challenges of policy design.
    Date: 2024–05–09
  5. By: Diegmann, André; Pohlan, Laura; Weber, Andrea
    Abstract: We study how connections to German federal parliamentarians affect firm dynamics by constructing a novel dataset to measure connections between politicians and the universe of firms. To identify the causal effect of access to political power, we exploit (i) new appointments to the company leadership team and (ii) discontinuities around the marginal seat of party election lists. Our results reveal that connections lead to reductions in firm exits, gradual increases in employment growth without improvements in productivity. The economic effects are mediated by better credit ratings while access to subsidies or procurement contracts are documented to be of lower importance.
    Keywords: firm performance, identification, political connections, politicians
    JEL: D72 L25 O43
    Date: 2024
  6. By: Krūminas, Pijus; Čepėnas, Simonas; Darškuvienė, Valdonė
    Abstract: Moya Chin's (2023) paper argues that politicians in two-round majoritarian systems have to appeal more broadly than those in single-round elections. The author uses data for mayoral elections in Brazil. The key findings of the paper conclude that of two-round systems (1) fostering inclusiveness, (2) resulting in higher levels and wider distribution of public goods, and (3) leading to better immediate societal outcomes in terms of drop-out and elementary literacy rates. The author uses regression discontinuity design to test her hypotheses. We test computational reproducibility and successfully duplicate the key results of the study. We also test for result replicability by modifying the data sample used by Chin (2023) using the same method. In nearly all cases, we find that our results are very close (in terms of direction of effect, magnitude, and statistical significance) to those obtained by the original author with only some relationships losing statistical significance. We reproduce and then replicate all the three key empirical results obtained by the author, meaning that there is an effect on inclusiveness, distribution of public goods, and more immediate societal outcomes (although, our study does not find a statistically significant effect of a two-voter system on elementary literacy rates).
    Date: 2024
  7. By: Cantoni, Davide; Kao, Andrew; Yang, David Y.; Yuchtman, Noam
    Abstract: Citizens have long taken to the streets to demand change, expressing political views that may otherwise be suppressed. Protests have produced change at local, national, and international scales, including spectacular moments of political and social transformation. We document five new empirical patterns describing 1.2 million protest events across 218 countries between 1980 and 2020. First, autocracies and weak democracies experienced a trend break in protests during the Arab Spring. Second, protest movements also rose in importance following the Arab Spring. Third, protest movements geographically diffuse over time, spiking to their peak, before falling off. Fourth, a country’s year-to-year economic performance is not strongly correlated with protests; individual values are predictive of protest participation. Fifth, the US, China, and Russia are the most over-represented countries by their share of academic studies. We discuss each pattern’s connections to the existing literature and anticipate paths for future work.
    Keywords: protests; information technology; movements; political participation
    JEL: D72 P00
    Date: 2024–02–15
  8. By: Dorward, Nick; Fox, Sean; Hoelscher, Kristian
    Abstract: Cities, and the process of urbanization more broadly, play an integral role in narratives and theories of political change, from revolutions to democratization. Yet most accounts fail to make clear distinctions between the political implications of (i) population concentration (spatial context effects), (ii) socioeconomic change in cities (demographic composition effects), and (iii) increases in the size of urban populations (scale effects). These distinctions are significant in the post-WWII context, which has seen rapid “urbanization without growth” in many low- and middle-income countries. We argue that cities facilitate political activity through spatial effects, tend to have populations biased in favor of democracy due to compositional effects, and that these effects have scalar properties—i.e. they increase with city size. Analysis of World Values Survey data from over 179, 000 individuals across 95 countries and cross-national regressions analyzing determinants of political change since 1960 in 161 countries are consistent with this theory.
    Date: 2024–05–22
  9. By: Crespi De Valldaura G, Virginia; Fifi, Gianmarco
    Abstract: Why do leftist forces accept, support and adopt free-market policies? To answer this question, we carry out a comparative study of left-wing groups (both parties and trade unions) in France, Italy and Spain during the late 1970s and the early 1980s. This period is widely acknowledged in international political economy to have represented a paradigm shift from post-war Keynesianism to neoliberal policy-making. We employ in-depth content analysis of memoirs, interviews to the press, opinion articles and policy-papers to explain actors’ positions on landmark policies implemented during such transition. In alignment with a developing literature in political economy (e.g. Mudge 2018), we find a proactive role of progressives in developing the ideological justification for the resort to liberal policies. However, we emphasise that widespread consensus among so-called progressives, rather than a leading role of technocrats or party experts, best explains such shifts. In this way, the paper casts doubts on interpretations of the liberalisation process that place excessive emphasis on the role of external constraints as well as on elite power. Drawing on Hall (1993), we argue that left-wing forces in the early 1980s have enacted a ‘second order change’, whereby policymakers use new instruments to meet existing policy objectives.
    Keywords: austerity; Left; neoliberalism; trade unions; Western Europe; T&F deal
    JEL: J1
    Date: 2024–05–01
  10. By: Thomas Drechsel
    Abstract: This paper combines new data and a narrative approach to identify shocks to political pressure on the Federal Reserve. From archival records, I build a data set of personal interactions between U.S. Presidents and Fed officials between 1933 and 2016. Since personal interactions do not necessarily reflect political pressure, I develop a narrative identification strategy based on President Nixon's pressure on Fed Chair Burns. I exploit this narrative through restrictions on a structural vector autoregression that includes the personal interaction data. I find that political pressure shocks (i) increase inflation strongly and persistently, (ii) lead to statistically weak negative effects on activity, (iii) contributed to inflationary episodes outside of the Nixon era, and (iv) transmit differently from standard expansionary monetary policy shocks, by having a stronger effect on inflation expectations. Quantitatively, increasing political pressure by half as much as Nixon, for six months, raises the price level more than 8%.
    JEL: C32 D72 E31 E40 E50
    Date: 2024–05
  11. By: Sunn Bush, Sarah; Cottiero, Christina; Prather, Lauren
    Abstract: The international election monitoring regime has become considerably more complex in the 21st century. Although the number of organizations engaged in high-quality election monitoring has plateaued, the number of low-quality monitors—commonly known as zombie monitors—hascontinued to grow. Low-quality election monitors threaten democracy because they validate flawed elections and undermine the legitimacy of the international election monitoring regime. This article argues that international politics have played a crucial role in the diffusion of low-quality electionmonitors. It hypothesizes that ties with autocratic powers that promote low-quality observers and membership in authoritarian regional organizations significantly increase the likelihood that a country will host low-quality monitors at its elections. To test the hypotheses, the article draws on original data on international election observation between 2000 and 2020 that identifies the most comprehensive set of groups of election monitors to date. A statistical analysis of the dataset supports the argument.
    Keywords: Social and Behavioral Sciences, election monitors, election observers, democracy, autocracy
    Date: 2024–05–01
  12. By: Brummel, Lars; Toshkov, Dimiter
    Abstract: Governments often face social protests contesting their policies and reform plans. In liberal democracies, governments are expected to listen to and consider the demands of the protesters. But in reality, there is often a trade-off between accommodating protesters and enacting timely and effective policies. We study the preferences of citizens for government actions in the context of significant social protests – from canceling and delaying the policies to pushing through with the reforms ignoring protesters to banning protests altogether. To do that, we conduct a survey experiment in the Netherlands in which we manipulate the level of government enacting reforms contested by social protests and whether the reforms are supported or opposed by a majority of the citizens. We also measure whether respondents agree with the substance of the reforms and their trust in government. The results indicate that people are more likely to support governments pushing through with reforms and ignoring social protests when the reforms enjoy majority support and respondents agree with the direction of the reform proposal. Trust in government has a similar effect, but the level of government does not matter. There is very little support for banning protests altogether, and none of the factors we consider predict this attitude. These findings suggest that – even in well-established democracies – citizens’ views on whether governments should listen to, rather than ignore, social protests are contingent on the policy content of the contested government reforms and the existence of majority support for such reforms in society; hence, on a mixture of instrumental and principled reasons, with the principle reflecting a majoritarian view of democracy.
    Date: 2024–05–21
  13. By: Marcel Caesmann; Janis Goldzycher; Matteo Grigoletto; Lorenz Gschwent
    Abstract: The spread of propaganda, misinformation, and biased narratives from autocratic regimes, especially on social media, is a growing concern in many democracies. Can censorship be an effective tool to curb the spread of such slanted narratives? In this paper, we study the European Union’s ban on Russian state-led news outlets after the 2022 Russian invasion of Ukraine. We analyze 775, 616 tweets from 133, 276 users on Twitter/X, employing a difference-in-differences strategy. We show that the ban reduced pro-Russian slant among users who had previously directly interacted with banned outlets. The impact is most pronounced among users with the highest pre-ban slant levels. However, this effect was short-lived, with slant returning to its pre-ban levels within two weeks post-enforcement. Additionally, we find a detectable albeit less pronounced indirect effect on users who had not directly interacted with the outlets before the ban. We provide evidence that other suppliers of propaganda may have actively sought to mitigate the ban’s influence by intensifying their activity, effectively counteracting the persistence and reach of the ban.
    Keywords: Censorship, policy effectiveness, text-as-data, media slant
    JEL: D72 D78 L82 P16
    Date: 2024–06
  14. By: Gutmann, Jerg; Neuenkirch, Matthias; Neumeier, Florian
    Keywords: International sanctions, political economy, public choice, rent seeking, trade, transaction costs
    JEL: F51 F53 K33
    Date: 2024

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