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on Positive Political Economics |
| By: | Rodrigo Chang; Laura Castellanos Author-Name: Esteban Penelas Author-Name: Javier Torres |
| Abstract: | This paper estimates the impact of the introduction of electronic voting technology on Municipal elections in Peru. Using a territorial regression discontinuity design, we estimate the impact on valid votes, and voter turnout. We find that, on average, electronic voting technology decreases blank votes by 1.8 percentage points and invalid votes by 4.4 percentage points. However, it did not have a significant effect on turnout rate. Difference-in-differences estimations and subsequent robustness checks confirm the validity of our results. |
| Keywords: | Electronic voting, political responsiveness, residual votes |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:apc:wpaper:203 |
| By: | Thea How Choon; Giovanna Marcolongo; Paolo Pinotti |
| Abstract: | Pressure groups may use bribes, violence, or a combination of both to bend politics to their will, and the choice between these methods of influence can vary depending on the type of institutional regime. We empirically investigate the dynamics of bribes and violence around elections in democracies and autocracies using a novel measure of corruption based on the Panama Papers and other massive data leaks on offshore entities in tax havens, which are often used as vehicles for bribes, and data on attacks against politicians around the world between 1990 and 2015. Evidence from staggered difference-in-differences and regression discontinuity in time models shows that in democracies attacks against politicians escalate before elections, whereas in autocracies bribes increase after elections. These findings align with a theoretical framework in which pressure groups use political violence to sway democratic elections in favor of their preferred candidates, while resorting to bribes to influence the behavior of newly appointed bureaucrats and public officials in autocracies. |
| Keywords: | Elections, Violence, Corruption, Pressure Groups |
| JEL: | K42 D72 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:baf:cbafwp:cbafwp24229 |
| By: | Alexandre Arnout (Aix-Marseille University, CNRS, AMSE, Marseille France) |
| Abstract: | I consider an electoral competition model where each candidate is associated with an exogenous initial position from which she can deviate to maximize her vote share, a strategy known as flip-flopping. Citizens have an intrinsic preference for consistent candidates, and abstain due to alienation, i.e. when their utility from their preferred candidate falls below a common exogenous threshold (termed the alienation threshold). I show how the alienation threshold shapes candidates’ flip-flopping strategy. When the alienation threshold is high, i.e. when citizens are reluctant to vote, there is no flip-flopping at equilibrium. When the alienation threshold is low, candidates flip-flop toward the center of the policy space. Surprisingly, I find a positive correlation between flip-flopping and voter turnout at equilibrium, despite voters’ preference for consistent candidates. Finally, I explore alternative models in which candidates’ objective function differs from vote share. I show that electoral competition can lead to polarization when candidates maximize their number of votes. |
| Keywords: | flip-flopping, turnout, electoral competition, alienation, polarization |
| JEL: | D72 C72 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2423 |
| By: | Kansikas, Carolina (University of Warwick); Bagues, Manuel (University of Warwick) |
| Abstract: | We investigate whether term limits can help historically underrepresented groups, such as women, gain faster access to positions of political power. We exploit evidence from Italian local elections where, in a context of rapidly increasing women's presence in politics, mayoral term limits were extended from two to three five-year terms in municipalities with less than 3, 000 inhabitants in 2014 and in those with a population between 3, 000 and 5, 000 in 2022. Using as control group slightly larger municipalities, we find that longer term limits delay younger cohorts' access to mayoral roles, significantly slowing the increase in female representation. The magnitude of the effect is substantial; the share of female mayors would be 4-10 percentage points higher if term limits had not been extended. The impact is stronger in municipalities with a larger presence of women at lower political levels and where gender quotas are in place, suggesting a complementarity between these policies. Our findings suggest that term limits help bridge the representational gap between entry and top-level political positions, especially in times of rapid societal change. |
| Keywords: | term limits, female political representation, Italian local elections |
| JEL: | J16 J18 J48 D72 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17175 |
| By: | Yasmine van der Straten (University of Amsterdam); Enrico Perotti (University of Amsterdam); Frederick van der Ploeg (University of Oxford and University of Amsterdam) |
| Abstract: | We study the evolution of voter support for public adaptation when political preferences are shaped by rising climate risk and economic inequality. Political support for tax-funded intervention to preserve habitable land evolves over time when households differ in age, income and beliefs. Support for public adaptation is initially low, rising as climate risk increases. We show that the political equilibrium experiences a tipping point in response to habitat loss if beliefs are not too dispersed, leading to a shift towards a more active adaptation policy. A steady rise in inequality may induce a second tipping point, but the policy impact depends on the balance between the gap in income and beliefs. Overall, public intervention is undermined by a †tragedy of the horizon†effect as cohorts internalize only partially its long-term benefits for future generations. This prevents public adaptation from converging to the social optimum even when political support is highest. |
| Keywords: | Climate change adaptation, economic inequality, tragedy of the horizon, political tipping points |
| JEL: | D63 H23 Q54 Q58 |
| Date: | 2024–02–29 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20240013 |
| By: | Hirseland, Aline-Sophia |
| Abstract: | This article explores the practice of "instructed voting" prevalent among rural Indigenous communities in Bolivia, referring to the taking of collective electoral decisions. It adds to the debate on clientelistic bloc voting by revealing voters' motives for participating in clientelistic deals, as based on interviews with Uru Indigenous community members and politicians. It shows the ambivalent significance of the practice for the Indigenous communities under study, being a protective mechanism against external threats on the one hand and a gateway to vote buying on the other. Social norms and trust in community authorities are found to be central drivers for achieving voters' compliance. The article adds another piece to the puzzle on how clientelistic deals happen in democratic systems under a secret ballot yet without apparent infringements of the law, which is the case in the communities under study here. |
| Keywords: | Bolivia, clientelism, bloc voting, collective voting decisions, Indigenous peoples |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:gigawp:302173 |
| By: | Elisabeth Kempf; Margarita Tsoutsoura |
| Abstract: | We review an empirical literature that studies how political polarization affects financial decisions. We first discuss the degree of partisan segregation in finance and corporate America, the mechanisms through which partisanship may influence financial decisions, and available data sources to infer individuals' partisan leanings. We then describe and discuss the empirical evidence. Our review suggests an economically large and often growing partisan gap in the financial decisions of households, corporate executives, and financial intermediaries. Partisan alignment between individuals explains team and financial relationship formation, with initial evidence suggesting that high levels of partisan homogeneity may be associated with economic costs. We conclude by proposing several promising directions for future research. |
| JEL: | G0 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32792 |
| By: | Matías Güizzo Altube (Inter-American Development Bank); Carlos Scartascini (Inter-American Development Bank); Mariano Tommasi (Universidad de San Andrés) |
| Abstract: | Inequality is a crucial issue in Latin America and the Caribbean, alongside very low productivity gains over the last 60 years and low levels of investment and efficiency. Most literature, especially on the political economy determinants of these problems, has considered these issues individually. This article revisits the discussion on the political economy of redistribution (or lack thereof) in the region, embedding it in a broader political economy debate. We characterize the region and its countries in terms of the size of the public sector, the extent of fiscal redistribution, and the efficiency of public action. We summarize various strands of literature that explain elements of the fiscal vector individually and provide a framework that combines elements from several strands, explaining why different countries exhibit different configurations of government size, redistribution, and efficiency. |
| Keywords: | Inequality, Redistribution, Political Economy, Growth, Poverty |
| JEL: | H20 H23 E62 P16 |
| Date: | 2023–09 |
| URL: | https://d.repec.org/n?u=RePEc:sad:wpaper:169 |
| By: | Lorenz Dögnitz; Théo Konc; Linus Mattauch |
| Abstract: | Besley and Persson (2023) pioneer a political economy model of a green transition with changing preferences. Here we solve for the optimal policy intervention and find that the optimal tax on the polluting good starts high and is subsequently declining, to support the transition in preferences. We quantify the welfare loss of ignoring preference changes. |
| Keywords: | Endogenous preferences, green transition, carbon tax, political economics, intertemporal optimisation |
| JEL: | D62 H23 Q54 |
| Date: | 2024–09–03 |
| URL: | https://d.repec.org/n?u=RePEc:bdp:dpaper:0047 |
| By: | Bocar A. Ba; Abdoulaye Ndiaye; Roman G. Rivera; Alexander Whitefield |
| Abstract: | We study how negative sentiment around an industry impacts beliefs and behaviors, focusing on demands for racial justice after the murder of George Floyd and the salience of the “defund the police” movement. We assess stakeholder beliefs on the impact of protests on the stock prices of police-affiliated firms. In our survey experiment, laypeople and finance professionals predicted more negative stock price outcomes when they lacked details on the products supplied by such firms. Exposure to narratives about the context of the protests further reduced the prediction accuracy of these groups. In contrast, product information improved the prediction accuracy of respondents. Turning to real-life behavior, we find that mutual funds exposed to protests were 20% less likely to hold police stocks, after the protests, than funds in areas without protests. Political support for maintaining police funding, though in the majority, declined by 4.3 percentage points in protest areas. The salience of the “defund the police” narrative led to significant overreactions in both financial predictions and real-life behaviour. |
| Keywords: | narratives, reasoning, surveys, financial prediction, social movements |
| JEL: | D72 D74 D83 G41 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11264 |
| By: | Cormier, Benjamin; Naqvi, Natalya |
| Abstract: | Outside of the rich world, international financial markets are thought to discipline borrowing governments by monitoring political and economic characteristics. But increasingly, asset managers do not assess individual country risk/return profiles. They replicate benchmark indexes, delegating investment decisions to index providers. This has two effects. First, it relocates market discipline into the hands of index providers. Second, it alters the constraints sovereigns face when accessing bond markets, conditioning the relationship between a sovereign’s political-economic features and its ability to raise capital. Using a novel data set of index inclusion and weights, we show that country-specific factors traditionally associated with bond market access do not have the expected constraining effects on countries included in a major index but do continue to affect excluded countries. Index investment has profoundly restructured debt markets by circumscribing the disciplinary link between country characteristics and capital allocation, with wide-ranging implications for the political economy of debt and finance. |
| JEL: | H62 |
| Date: | 2023–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:117248 |