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on Positive Political Economics |
| By: | Raymond Fisman; Jetson Leder-Luis; Catherine M. O'Donnell; Silvia Vannutelli |
| Abstract: | Revolving door laws restrict public officials from representing private interests before government after leaving office. While these laws mitigate potential conflicts of interest, they also may affect the pool of candidates for public positions by lowering the financial benefits of holding office. We study the consequences of revolving door laws for political selection in U.S. state legislatures, exploiting the staggered roll-out of laws across states over time. We find that fewer new candidates enter politics in treated states and that incumbent legislators are less likely to leave office, leading to an increase in uncontested elections. The decline in entry is particularly strong for independent and more moderate candidates, which may increase polarization. We provide a model of politician career incentives to interpret the results. |
| JEL: | D72 D73 K16 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33626 |
| By: | Conconi, Paola; Cucu, Florin; Gallina, Federico; Nordotto, Mattia |
| Abstract: | The European Union (EU) has long been accused of suffering from a "democratic deficit". The European Parliament (EP), the only EU institution directly elected by citizens, is seen as having limited powers. Moreover, its members (MEPs) are often portrayed as unresponsive to the interests of their constituents due to the second-order nature of European elections: instead of being shaped by EU policies, they are driven by domestic politics. In this paper, we provide evidence against these Eurosceptic arguments using data on a key policy choice made by MEPs: the approval of free trade agreements. First, we show that MEPs are responsive to the trade policy interests of their electorate, a result that is robust to controlling for a rich set of controls, fixed effects, and employing an instrumental variable strategy. Second, we carry out counterfactual exercises demonstrating that the EP's power to reject trade deals can help explain why only agreements with broad political support reach the floor. Finally, against the idea that European elections are driven solely by domestic politics, we find that the degree of congruence between MEPs' trade votes and their electorate's interests affects their re-election chances. |
| Keywords: | EU democratic deficit; European Parliament; roll-call votes; trade agreements |
| JEL: | F13 D72 |
| Date: | 2024–10–15 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126839 |
| By: | Th\'eo Delemazure; Rupert Freeman; J\'er\^ome Lang; Jean-Fran\c{c}ois Laslier; Dominik Peters |
| Abstract: | In many proportional parliamentary elections, electoral thresholds (typically 3-5%) are used to promote stability and governability by preventing the election of parties with very small representation. However, these thresholds often result in a significant number of "wasted votes" cast for parties that fail to meet the threshold, which reduces representativeness. One proposal is to allow voters to specify replacement votes, by either indicating a second choice party or by ranking a subset of the parties, but there are several ways of deciding on the scores of the parties (and thus the composition of the parliament) given those votes. We introduce a formal model of party voting with thresholds, and compare a variety of party selection rules axiomatically, and experimentally using a dataset we collected during the 2024 European election in France. We identify three particularly attractive rules, called Direct Winners Only (DO), Single Transferable Vote (STV) and Greedy Plurality (GP). |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.17156 |
| By: | Boese-Schlosser, Vanessa; Eberhardt, Markus |
| Abstract: | Previous research has established a link between democratic governance and sustainable economic growth. Yet, over the past decade, we have witnessed a global decline of democratic institutions across a wide range of political contexts. How has this erosion of democracy affected countries' economic trajectories over the 1999-2023 period? This paper investigates the economic consequences of democratic breakdowns, focusing on whether - and how - losing democracy comes with an economic cost. Using a heterogeneous difference-in-differences estimator and drawing on the hierarchical structure of the Varieties of Democracy dataset, we examine both high-level democracy definitions and their institutional building blocks. Our analysis proceeds in three steps. First, we estimate the average treatment effect of regime collapse and find robust evidence of an autocratic loss: on average, countries that transition from democracy to autocracy experience a decline in income per capita of around 1.5%, with losses reaching 4-6% two decades after collapse. This effect is driven more strongly by the breakdown of electoral democracy than liberal democracy. Second, we disaggregate democracy into its low-level institutional components to identify the source of this loss. We find that the negative economic effects are primarily driven by the erosion of free and fair elections-while other components, such as freedom of expression or judicial constraints on the executive, play a much smaller role. Third, we explore transmission channels that explain how democratic collapse translates into economic decline. We find suggestive evidence that cuts to investment in social support and public goods - such as education - are among the key mechanisms through which autocratic loss materializes, with some effects emerging more immediately and others likely to deepen over time. Our findings underscore the long-term risks posed by democratic erosion and highlight the central role of electoral integrity in safeguarding economic development. |
| Keywords: | Democracy, Democratic Breakdown, Difference-in-Differences, Heterogeneous Treatment, Interactive Fixed Effects |
| JEL: | O10 P16 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wzbtod:316436 |
| By: | Pei Kuang; Michael Weber; Shihan Xie |
| Abstract: | This paper examines the impact of political polarization on public trust in the Fed and its influence on macroeconomic expectations. Using a large-scale survey experiment which we fielded on President Trump's 2025 inauguration day, we study how households form beliefs about the Fed regarding its political leaning, independence, and trustworthiness. Political alignment significantly shapes perceptions: individuals who view the Fed as politically aligned report higher independence of and trust in the Fed, leading to lower inflation expectations and uncertainty. Strategic communication on institutional structure and policy objectives effectively mitigates perception biases, reinforcing the Fed’s credibility and enhancing its policy effectiveness. |
| JEL: | D72 D73 D74 E63 E70 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33524 |
| By: | Oliveira, Savio Luan da Costa (Doutorando em Economia pela UFPB. Instituto Mauro Borges – IMB); Souza, Wallace Patrick Santos de Farias (Professor do PPGE e do Departamento de Economia da UFPB); Araújo, Jevuks Matheus de (Professor do PPGE e do Departamento de Economia da UFPB) |
| Abstract: | In this study, we investigate whether dynastic mayors are more or less likely to engage in corruption when compared to non-dynastic mayors. Using data from random government audits conducted in the Brazilian municipalities, we use RDD on close elections to compare municipalities that barely had a dynastic candidate elected as mayor to those that did not. The identification of relatives in politics is based on the matching of their last names. We find that dynastic mayors are more likely to engage in practices of over-invoicing compared to non-dynastic mayors. |
| Keywords: | Political dynasties; Corruption; Regression discontinuity design |
| JEL: | C10 D73 |
| Date: | 2025–05–07 |
| URL: | https://d.repec.org/n?u=RePEc:ris:nereus:2025_004 |
| By: | Matthias Doepke; Hanno Foerster; Anne Hannusch; Michèle Tertilt |
| Abstract: | During the first half of the twentieth century, many US states enacted laws restricting women's labor market opportunities, including maximum hours restrictions, minimum wage laws, and night-shift bans. The era of so-called protective labor laws came to an end in the 1960s as a result of civil rights reforms. In this paper, we investigate the political economy behind the rise and fall of these laws. We argue that the main driver behind protective labor laws was men's desire to shield themselves from labor market competition. We spell out the mechanism through a politico-economic model in which singles and couples work in different sectors and vote on protective legislation. Restrictions are supported by single men and couples with male sole earners who compete with women for jobs. We show that the theory's predictions for when protective legislation will be introduced are well supported by US state-level evidence. |
| JEL: | D13 D72 D78 E24 J12 J16 N30 O10 O43 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33720 |