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on Positive Political Economics |
| By: | Aidt, Toke; Asatryan, Zareh; Badalyan, Lusine |
| Abstract: | Many governments operate consumer debt relief programs, often timed to match the election cycle, but their political effects are not well understood. We ask if debt relief can influence elections in democracies. Our motivating exercise is the Biden administration's promise to relieve student debt. We utilize quasi-experimental variation generated by another very large debt relief program enacted in the Republic of Georgia that, similar to USA, affected every sixth voter. We estimate that the program helped the incumbent candidate win that election, and that its effects persisted. Overall, we show how economic power can translate into political power in democracies. |
| Keywords: | Consumer debt relief, US student debt, distributive politics, vote buying, elections |
| JEL: | G51 D72 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:300009&r= |
| By: | Basistha, Ahana (Indian Statistical Institute); Dhillon, Amrita (Kings College and CAGE); Chaudhuri, Arka Roy (Shiv Nadar University) |
| Abstract: | This paper analyzes the existence of electoral cycles in infrastructure provision in the context of a large rural road building program in India. We use data covering 150, 000 roads over a decade to demonstrate an increase in road building activity before state elections. These electoral cycles in rural road building do not translate into efficiency losses in terms of quality, cost or delay. However, we find evidence that politicians build roads with a lower stipulated construction time before elections. In line with our model’s predictions, we also find that electoral constituencies with a larger share of uninformed voters display larger electoral cycles. |
| Keywords: | Political Business Cycles, Elections, Public Goods, Rural Infrastructure, India JEL Classification: D72, D73, H41, O18 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:712&r= |
| By: | Jesús Fernández-Villaverde; Carlos Sanz |
| Abstract: | Due to a last-minute fight among the candidates, Vox, a party at the right end of the Spanish political spectrum, could not run in Santa Cruz de Tenerife, a relatively representative electoral constituency, in the general election of July 23, 2023. Since this fight was a power struggle within Vox unrelated to any fundamental in the constituency or ideological differences among the candidates, we can exploit this event as a quasi-natural experiment to measure the effects of new parties on electoral outcomes. Using three different but complementary research designs (matching, synthetic controls, and a triple-difference analysis), we get to the same main result: Vox's presence significantly increases votes for the right as a whole. The increase in votes for the right caused by Vox's presence is particularly strong in areas with high unemployment. The presence of Vox also reduces protest votes but, on the other hand, votes for the left are unaffected. |
| JEL: | D72 N30 N40 Z13 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32610&r= |
| By: | Robin J. Döttling; Doron Y. Levit; Nadya Malenko; Magdalena A. Rola-Janicka |
| Abstract: | We study the interplay between a "one person-one vote" political system and a "one share-one vote" corporate governance regime. The political system sets Pigouvian subsidies, while corporate governance determines firm-specific public good investments. Our analysis highlights a two-way feedback effect. In a frictionless economy, shareholder democracy is irrelevant: the political system fully offsets any effects of shareholder influence. With frictions in public policy provision, pro-social corporations fill the void of a dysfunctional regulatory system and increase the provision of public goods-demonstrating the benefit of shareholder democracy. Nevertheless, shareholder democracy can hurt a typical citizen because of the representation problem: it favors the preferences of the wealthy. If shareholders have extreme views, there can be a backlash against ESG initiatives, and the political system may undo or tax corporate social responsibility measures. Advancements in financial technologies that increase investor diversification or enable pass-through voting have important implications for these trade-offs of shareholder democracy. |
| JEL: | D62 D72 G28 G34 H23 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32605&r= |
| By: | Amal Ahmad |
| Abstract: | In democracies with widespread poverty, what is the impact of programmatic transfers on voting and on incumbent power? This paper provides the first village-level quasiexperimental evidence on this for India, in the context of the Hindu-nationalist party in power. First, I provide a novel method for linking Indian villages to polling booths and for obtaining village-level electoral data. Second, focusing on a program which transfers development funds to villages with a high share of disadvantaged castes, I use a discontinuity design to identify the effects of both past and promised transfers on voting in India’s largest state. Promised transfers increase village turnout slightly but neither treatment impact the villages’ vote share for the Hindu-nationalist incumbent, which is high across the board. The results suggest that political competition limits the impact of programmatic transfers on voting behavior, and they shed light on the recent slide to ethnic nationalism in the world’s largest democracy. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:not:notnic:2024-08&r= |
| By: | Lupu, Noam |
| Abstract: | Latin America is widely acknowledged as one of the most unequal regions of the world (Sánchez-Ancochea 2021). But it is also one of the most democratic, certainly as compared to other developing regions. These two facts seem difficult to reconcile. Both folk theories of democratic representation to borrow a phrase from (Achen and Bartels 2016) and canonical models in political economy would have us believe that democracies ought to reduce inequality through redistribution (e.g., Acemoglu and Robinson 2006; Meltzer and Richard 1981; Romer 1975). As inequality increases, the proportion of the population that would benefit materially from redistribution also increases, making it more likely that a pro-redistribution political coalition would win elections and deliver social policy. And yet, despite several decades of uninterrupted electoral democracy in most of the region, Latin American governments have consistently and with but few exceptions failed to reduce inequality substantially. This paper begins by discussing why contemporary Latin American party systems are weak, focusing on both structural/institutional factors that pull party systems toward less institutionalization and recent changes to the regions political economy that undermined the more institutionalized systems. Then links the regions low levels of party-system institutionalization with lower levels of redistribution, both theoretically and empirically through cross-national comparisons. Finally, the mass and elite surveys show that legislatures in the region fail to reflect the pro-redistribution preferences of voters, further demonstrating how weak parties undermine the representation necessary for successful redistribution. |
| Keywords: | Inequality;Political Processes;National Government |
| JEL: | D30 D72 H50 P00 |
| Date: | 2024–04 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13481&r= |
| 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: | Politicians, Firm Performance, Identification, Political Connections |
| JEL: | O43 L25 D72 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:300014&r= |
| By: | Berliant, Marcus; Gouveia, Miguel |
| Abstract: | The literatures dealing with voting, optimal income taxation, implementation, and pure public goods are drawn on here to address the problem of voting over income taxes to finance a public good. In contrast with previous articles, general nonlinear income taxes that affect the labor-leisure decisions of consumers who work and vote are allowed. Uncertainty plays an important role in that the government does not know the true realizations of the abilities of consumers drawn from a known distribution, but must meet the realization-dependent budget; the tax system must be robust. Even though the space of alternatives is infinite dimensional, conditions on primitives are found to assure existence of a majority rule equilibrium. |
| Keywords: | Voting; Income taxation; Public good; Robustness |
| JEL: | D72 D82 H21 H41 |
| Date: | 2024–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121260&r= |
| By: | Marco Grotteria; Max Miller; S.Lakshmi Naaraayanan |
| Abstract: | This paper documents that foreign lobbying influences US government spending. We introduce a comprehensive dataset of over 230, 000 date-stamped, in-person meetings between agents representing foreign governments and individual US legislators, state governors, and employees of US executive agencies from 2000 to 2018. The data suggest that foreign agents meet disproportionately with individuals important for foreign aid and corporate subsidies, like legislators sitting on powerful congressional committees. Foreign agents also maintain connections with legislators even after they depart powerful committees, providing evidence that meetings do not just reflect short-term quid-pro-quo arrangements. Around meetings, foreign countries receive greater amounts of financial aid. Foreign firms whose governments lobby more often also receive larger corporate subsidies from areas the legislators and governors that they meet with represent. Finally, legislators who meet more often with foreign agents receive both monetary and electoral benefits, while we do not find changes in the political contributions they receive or in their probability of re-election, suggesting that legislators are not punished by their constituents for meeting with representatives of foreign countries. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:not:notnic:2024-12&r= |
| By: | Morrison, Kelly; Savun, Burcu; Donno, Daniela; Davutoglu, Perisa |
| Abstract: | By influencing beliefs about electoral quality, international election observation missions (EOMs) play an important role in shaping post-election contention. As the number and variety of international organizations (IOs) involved in election monitoring has grown, many elections host multiple missions, and disagreement among them is common. This phenomenon of competing judgments is particularly prevalent in electoral authoritarian regimes, as leaders seek to invite “friendly” IOs to counteract possible criticism from more established EOMs. Drawing from research about the varying domestic credibility of EOMs and the demobilizing effects of disinformation, we argue that competing judgments increase uncertainty about electoral quality, which in turn dampens post-election contention. Using newly available data on EOM statements as reported in the international media, we show that competing judgments reduce post-election contention in a sample of 115 non-liberal democracies from 1990–2012. A survey experiment in Turkey solidifies the micro-foundations of our argument: Individuals exposed to competing judgments have more positive perceptions of election quality and less support for post-election mobilization, compared to those receiving information only about EOM criticism. Our findings provide systematic evidence that governments holding flawed elections have incentives to invite multiple election observation missions to hedge against the political risks of criticism. |
| Keywords: | Social and Behavioral Sciences, Election monitoring, election observation missions (EOMs), international organizations, post-election contention, authoritarian governments |
| Date: | 2023–08–23 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:globco:qt3kc4f57j&r= |
| By: | Olejnik, Łukasz Wiktor |
| Abstract: | This article demonstrates that the influence of government ideology on military expenditures is more nuanced than it was shown in previous research and using only aggregated military expenditures may provide ambiguous results. The disaggregation of military expenditures allows concluding that in the 29 studied EU and NATO countries, right-wing governments tend to spend more on military equipment and arms purchases, while left-wing governments tend to spend more on military personnel. Government ideology may also create compositional political budgetary cycles, due to the fact that left-wing governments fighting for re-election significantly increase personnel expenditures in election years, while right-wing governments spend significantly more on arms for soldiers. Moreover, using a newly created dataset of election results in 510 municipalities or constituencies with military bases in 29 EU and NATO countries allows concluding that governments with above-average support of military-related voters in previous elections spend more on the military during the entire term, which suggest that ruling politicians support their core voters. |
| Keywords: | economic theory of alliances, peace and defence economics, military burden |
| JEL: | H56 H76 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:300005&r= |
| By: | Lee, Neil; Pardy, Martina; Mcneil, Andrew |
| Abstract: | The early 2020s saw a spike in inflation across much of the advanced world, with pervasive economic consequences. There is strong evidence that economic shocks generally have political consequences, but few studies have specifically focused on inflation. In this paper, we address this gap using an original, pre-registered survey experiment in the United Kingdom, a country which saw the highest consumer price inflation in 40 years and a major cost of living crisis. First, we describe how individuals, on average, are only neutral in their confidence in the Bank of England’s and economists’ ability to tackle inflation. The population is even more pessimistic regarding the government’s abilities. Second, using an experimental survey vignette, we causally identify the effect of reminding and/or informing participants about the high levels of inflation. While our treatment shifts inflation expectations, we find no evidence that it reduces trust in government, the bank of England, nor economists more generally. Instead, we find weak evidence that respondents blame corporations. Inflation also makes citizens less likely to support public sector pay rises although we find no effect on authoritarianism, redistribution attitudes, attitudes towards overseas trade, or optimism towards the future. |
| Keywords: | inflation; political attitudes; political trust; authoritarianism; survey experiment |
| JEL: | N0 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123926&r= |