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on Positive Political Economics |
| By: | Schreiner, Nicolas (University of Basel); Stutzer, Alois (University of Basel) |
| Abstract: | We study how citizens’ right to directly decide on policies through popular initiatives affects the attractiveness of extreme candidates in representative elections. In our theoretical framework, single prominent policy issues on which individual voters hold extreme views get a large weight in their assessment of candidates, thereby favoring ideologically extreme ones. If citizens can decide the controversial policy issues separately on the ballot, this decouples the issues from legislative politics and moderate candidates become relatively more attractive to voters. We apply our theory to U.S. state legislative elections and find that ideologically extreme candidates receive significantly lower voter support in initiative than in non-initiative states. This holds in particular for states with low qualification requirements for initiatives. In concurrent elections for the U.S. House we do not observe this difference in the electoral success of extreme candidates between initiative and non-initiative states. The effect seems partly mediated by lower campaign donations to extreme candidates. |
| Keywords: | moderating selection effect, initiative right, extremist ideology, direct democracy, campaign donations, polarization, political institutions, voting |
| JEL: | D02 D72 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18266 |
| By: | Alexandre Arnout (Aix-Marseille Univ., CNRS, AMSE, Marseille, France); Gaëtan Fournier (Aix-Marseille Univ., CNRS, AMSE, Marseille, France) |
| Abstract: | Political campaigns influence how voters prioritize issues, which in turn impacts electoral outcomes. In this paper, we study how candidates’ communication shapes which issues prevail during the campaign, through which mechanisms, and to what extent. We develop an electoral competition model with two candidates, each endowed with exogenous platforms and characteristics. Candidates allocate strategically their communication time across two issues to maximize their expected vote shares. We find that when one candidate holds similar comparative advantages on both issues, the disadvantaged candidate communicate on a single issue to saturate the campaign with one topic and then increases the randomness of the election. The advantaged candidate has the opposite incentive and communicate on both issues, creating an asymmetry in the campaign. We show that in some cases, the campaign can become entirely centered on a single issue. |
| Keywords: | electoral competition, Communication time, Priming |
| JEL: | C72 D72 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2520 |
| By: | Matteo Gamalerio (Universitat de Barcelona & IEB); Federico Trombetta (DISEIS, Università Cattolica del Sacro Cuore) |
| Abstract: | This paper investigates how the interplay between politics and firms influences the profil·les of political candidates and their policy decisions. Specifically, we analyze the effects of an anti-revolving door law, which impose a mandatory “cooling-off” period before former politicians can take significant positions in the bureaucracy or in state-owned enterprises. We develop a political agency model where politicians can access “politically connected outside options” (PCOs), and examine how the reduction in the expected value of these PCOs impacts candidate selection and policymaking. Our findings suggest that a decline in the value of PCOs disproportionately affects individuals with lower human capital, thereby increasing the proportion of high human capital candidates. Simultaneously, this shift heightens the likelihood that low human capital politicians will pander toward the voters, even when such policies are suboptimal. We test those predictions using data from Italian municipalities. Leveraging a population threshold that triggers the implementation of anti-revolving door policies, we employ a difference-in-discontinuity approach. Our results show that the cooling-off period raises the average education levels of candidates and elected mayors. Additionally, we find that the reform reduces the probability that low human capital mayors adopt electorally costly policies. |
| Keywords: | Revolving doors, selection of politicians, policymaking, difference-indiscontinuity |
| JEL: | D72 D73 H75 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ieb:wpaper:doc2025-03 |
| By: | Francesco Morelli (Link Campus University) |
| Abstract: | I analyze U.S. government spending multipliers conditional on the political cycle. The results indicate that, in many specifications, multipliers are positive during second terms and negative during first terms. Moreover, across all formulations, multipliers are positive under Democratic administrations and negative under Republican administrations. These findings are robust to alternative controls and model specifications, and they underscore the pivotal role of political expectations in shaping the sign and magnitude of fiscal spending multipliers. |
| Keywords: | Spending multipliers; State dependence; Political cycle; Partisan thoery; Local projections. |
| JEL: | E62 E32 C32 D72 H50 |
| Date: | 2025–11–17 |
| URL: | https://d.repec.org/n?u=RePEc:rtv:ceisrp:617 |
| By: | Abramitzky, Ran (Stanford University and NBER.); Ben-Porath, Netanel (Northwestern University); Lavy, Victor (Warwick University, The Hebrew University, and NBER); Palg, Michal (The University of Haifa) |
| Abstract: | While many socialist countries suffered from harsh economic crises, studying their impacts on economic and political attitudes is challenging because of the scarcity of reliable data in nondemocratic contexts. We study a democratic socialist setting where we have ample information on such attitudes: the Israeli kibbutzim. Exploiting an economic crisis that hit some kibbutzim more than others, we find that the crisis led to reduced support for leftist political parties. This effect persisted for over 20 years after the crisis had ended. We document that the electoral movement was rooted in a rightward shift in economic attitudes, suggesting that economic crises may undermine socialist regimes by silently changing attitudes toward them. In our unique setting, we can also study recovery mechanisms from the crisis. First, we find that while a sharp debt relief arrangement restored trust in the leadership, it did not reverse the impact of the crisis on economic attitudes. Second, as part of their efforts to recover from the crisis, kibbutzim liberalized their labor markets. Analyzing the staggered shift away from equal sharing to market-based wages, we find that this labor market liberalization led kibbutz members to move further rightward in their political voting and economic attitudes. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1589 |
| By: | Hanappi, Hardy |
| Abstract: | The goal of this paper is to use the experiences of three surprising election results in 1930, 1916 and 2024 to explain which lessons can be drawn for further development of humanity’s evolution. It turns out that deep changes in the organisation of self-governance will be needed to master the evolving crises of global capitalism, which, over the last years, has been morphing into authoritarian, global, absolute capitalism. |
| Keywords: | Democracy, Elections, Global Political Economy, Fascism |
| JEL: | B00 O1 O10 P16 P17 |
| Date: | 2025–11–07 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126743 |
| By: | Maria Arakelyan; Tatiana Evdokimova |
| Abstract: | This paper contributes to the relatively limited literature on the impact of political uncertainty on international capital flows to emerging market economies. We incorporate elections as a proxy for political uncertainty into a standard push-pull framework for analyzing capital flows. Using quarterly data for a panel of 38 emerging market economies from 1990 to 2020, we show that periods surrounding elections are associated with a decline in gross private capital inflows. This adverse impact is larger and more persistent when uncertainty extends beyond the election period, for example in the context of uncertain policy priorities following incumbent’s loss. By contrast, higher levels of overall political stability appear to mitigate these adverse effects. We also find evidence that stronger institutions, as reflected in indicators such as regulatory quality and rule of law, help to mitigate the adverse effects of political uncertainty on capital flows. The results remain robust across a range of alternative specifications, including controls for standard economic drivers of capital flows, election characteristics, and model assumptions. |
| Keywords: | Capital flows; political cycles; uncertainty; emerging markets; push and pull factors |
| Date: | 2025–11–14 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/243 |
| By: | Paul C. Behler (University of Bonn); Laurenz Guenther (Bocconi University, Toulouse School of Economics) |
| Abstract: | While the recent rise of populism has led many scholars to study populism in the modern era, its long-run evolution remains underexplored. This paper analyzes German parliamentary speeches to study populism over the long run, covering the Weimar Republic (1918–1933) and the united Federal Republic (1991–today). We employ a tailored and validated machine learning model to measure populism and dissect it into anti-elitism and people-centrism. We find that in both republics, populism is similarly common, similarly distributed across the ideological spectrum, and increases over time. Moreover, in both states, left-wing parties were initially the most populist group but were eventually overtaken by right-wing parties. However, we find a difference in the form of populism: in the Weimar Republic, the increase in populism is driven by a surge in the anti-elitism of right-wing parties, while in the Federal Republic, it is due to a general rise in people-centrism. |
| Keywords: | Populism, Nazi, Weimar, Radical, Democracy, Right-wing, Far-right, Machine learning, BERT, Text analysis, Rhetoric |
| JEL: | P16 N40 C89 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:381 |
| By: | Marbach, Moritz |
| Abstract: | Internal migration, a common phenomenon in all countries, reshapes political geography by altering both the composition and preferences of local electorates, with significant implications for electoral outcomes. Despite increasing research on the political consequences of internal migration, there is little guidance on how to disentangle compositional from exposure effects when analyzing the causal effect of internal migration on district-level outcomes. In this paper, we define compositional effects within a standard potential outcome model, and we demonstrate that compositional and exposure effects jointly constitute the total causal effect of internal migration. We discuss potential avenues to identify, bound, and estimate compositional effects, leveraging additional data and assumptions. To illustrate the importance of disentangling compositional from exposure effects, we analyze the exodus of East Germans to West Germany shortly after the fall of the Berlin Wall, demonstrating how out-migration to West Germany shaped electoral outcomes in East Germany through compositional effects. |
| Date: | 2025–11–11 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:pq3bd_v1 |
| By: | José María Durán-Cabré (Universitat de Barcelona & IEB); Alejandro Esteller-Moré (Universitat de Barcelona & IEB); Riccardo Secomandi (University of Ferrara & IEB) |
| Abstract: | We examine how information influences the marginal willingness to pay taxes (MWTPT) through a four-wave randomized survey experiment conducted during the COVID-19 pandemic. Specifically, we assess the impact of quantitative (data on the actual tax-to-GDP ratio) and qualitative (basic pros and cons of taxation) information on revealed MWTPT. The results show that qualitative information increases MWTPT, particularly among high-income individuals. In contrast, quantitative information only reduces MWTPT among high-income individuals who initially underestimated the aggregate tax burden. Hence, those who are potentially more affected by taxes are also more sensitive to the provision of information. These findings suggest that information can shape perceptions of the tax system and, consequently, influence individuals' willingness to contribute to public good provision. This has important implications for tax policy design and efforts to reduce political polarization. If these efforts are not properly implemented, the revealed price of democracy will remain biased. |
| Keywords: | Survey experiment, Fiscal knowledge, Marginal Willingness to Pay Taxes, Income based behaviour |
| JEL: | D72 D91 H20 H26 H30 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ieb:wpaper:doc2025-04 |
| By: | Rodriguez-Pose Andrés; Dijkstra Lewis (European Commission - JRC); Dorati Chiara (European Commission - JRC) |
| Abstract: | Over the past two decades, support for Eurosceptic parties has climbed from fringe to nearly one third of voters. Promising renewed prosperity through less European integration, these parties imply Euroscepticism is a ‘free lunch.’ Drawing on an original panel of 1, 166 European NUTS 3 regions (2004 2023) and using fixed , random effects, and difference in differences designs, we test how rising Euroscepticism connects with regional economic and demographic outcomes. We track GDP per capita, productivity, employment, and population growth. We find that a region 10 points more Eurosceptic than another could have ended up with GDP per capita roughly 5% lower than the less Eurosceptic region, as the negative economic influence of Euroscepticism compounds across cycles and intensified after the financial and austerity crises. The same applies for productivity and employment. Demographic impacts are smaller but point in the same direction. Even without governing, Eurosceptic support appears to deter investment and raise uncertainty, deepening the very stagnation that fuels discontent. There is no free lunch: political backlash against European integration carries measurable costs for the regions that embrace it. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:termod:202509 |
| By: | Thomas Groll; Sharyn O'Halloran |
| Abstract: | This chapter examines the link between delegation and lobbying, two themes central to political economy. Delegation models explore how legislatures manage uncertainty and control bureaucratic agents, while lobbying models analyze how organized interests influence policy through contributions, information, and advocacy. We review the growing body of research that integrates these literatures, showing how the prospect of lobbying affects legislative incentives to delegate and how the structure of delegated authority shapes lobbying strategies. We highlight common-agency frameworks that capture the recursive relationship between delegation and lobbying and empirical studies documenting how venue choice, information provision, and interest group mobilization mediate delegation outcomes. We also review applications to agency oversight and fiscal policy. Finally, we present a model of regulatory rule-making that embeds lobbying directly into the delegation decision, offering predictions for both theory and empirical analysis. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.17391 |