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on Positive Political Economics |
| By: | Joonkyu Choi; Veronika Penciakova; Felipe Saffie |
| Abstract: | We study the role of firms’ political influence on the effectiveness of government spending using ARRA as a laboratory. Through an IV approach, we show that a 10 percentage points increase in the share of politically connected spending lowers the job creation effect of stimulus by 33 percent at the state level. We exploit ex-post close state-level elections to establish that firms that contributed to winning candidates create fewer jobs after winning grants. Using a quantitative general equilibrium model, we show that politically connected spending also lowers the aggregate jobs multiplier, and that the dampening effect is rationalized by connected firms charging higher markups. |
| JEL: | D72 E62 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32574&r= |
| By: | Maria Cotofan; Karlygash Kuralbayeva; Konstantinos Matakos |
| Abstract: | The effects of climate change have become far more noticeable in recent years, with abnormally high temperatures recorded across the world. Maria Cotofan, Karlygash Kuralbayeva and Konstantinos Matakos examine how spikes in temperature influence political behaviour and how age groups respond differently. |
| Keywords: | preference formation, environmental policies, policy support, voting |
| Date: | 2024–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepcnp:684&r= |
| By: | QIN, Abby Youran; Dubree, Wil; Wagner, Michael W. |
| Abstract: | Political homophily has been extensively examined as an individual tendency, but we know little about the social, cultural, and economic conditions that foster homophilic connections. We offer a contextual explanation of political homophily and shed light on spatial polarization from a social-communication network perspective by combining GLMNet models, spatial lag regressions, and geographically weighted regressions to examine various ecological factors’ roles in the political homophily observable in county-level physical mobility and Facebook friendship networks. Overall, our analyses suggest that urban culture characterized by large population, robust local news provision, racial-ethnic diversity, and progressive political culture tend to foster politically inclusive connections. More specifically, the proportion of Democrats is strongly associated with more cross-cutting connections, both online and offline. While population size is associated with lower offline homophily, racial-national diversity and local news availability play more important roles in lowering online homophily. Geographical contexts matter in the way people socialize with one another, even in the era of internet and social media. |
| Date: | 2024–06–27 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:3yg8q&r= |
| By: | Alogoskoufis, George |
| Abstract: | This paper reviews, analyses and interprets the evolution of the state and the economy of post-war Greece, before and after the political transition to democracy in 1974. The transition led to a regime-change involving a very large part of the ideological and institutional edifice that characterised Greece in the twenty-five years between the end of the civil war in 1949 and the transition to democracy in 1974. Although social and political institutions and performance improved significantly after 1974, economic performance deteriorated sharply. The analysis suggests that although this was to be partly expected because of international developments, the sharp deterioration is economic performance was mainly the result of the failures of the post-1974 political regime to substitute the commitment and coordination mechanisms that had contributed to the economic ‘miracle’ of the 1950s and the 1960s, follow appropriate and consistent rules in economic policy and introduce the necessary reforms. In addition, Greece entered the E.U and, later, the euro area relatively unprepared, something which contributed to the deterioration in its economic performance and, eventually, the debt crisis of the 2010s and the great depression that followed. The final section of the paper discusses several reforms that could help put Greece back on track economically, consolidating and improving its position in the E.U and the euro area, while strengthening the desirable social and political characteristics of the post-1974 regime. |
| JEL: | N0 |
| Date: | 2024–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124056&r= |
| By: | Matthew DeHaven; Hannah Firestone; Chris Webster |
| Abstract: | We find striking correlations between the presidential election outcome probability and major financial indicators, including USD currency pairs, bond prices, stock index futures, and a market volatility measure. The correlations are consistent with 'risk-on' behavior in markets, a term which describes investors moving toward riskier asset classes, as the election results became clearer. Further, we decompose the market reaction into a 'reduction in uncertainty' component and a 'probability of a Democratic party presidency' component. This decomposition reveals how markets reacted to the increasing certainty of the outcome as election results came in. Finally, we analyze the differing market reactions to the presidential election and the Senate election, including data from the unique Georgia runoffs, and demonstrate that bond prices were particularly sensitive to the probability of a combined Democratic Senate and Presidency. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.03527&r= |