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on Positive Political Economics |
| By: | Anthony Edo; Thomas Renault; Jérôme Valette |
| Abstract: | How does the electoral success of a far-right political force shape the strategies and policy platforms of mainstream candidates? We answer this question by exploiting the political shock of the creation of the Front National, an antiimmigration party, in 1972 and its sudden electoral breakthrough in the 1980s. Through a comprehensive textual analysis of candidate manifestos in French parliamentary elections from 1968 to 1997, we find that right-wing candidates respond to local far-right success, measured as voting shares, by amplifying the salience of immigration in their manifestos. They also adopt more negative positions on immigration and increasingly associate it with issues such as crime and the welfare state. In contrast, the ideological positions of left-wing candidates do not shift in response to far-right electoral gains. We finally show that the strategic adjustments of right-wing candidates help mitigate electoral losses to far-right competitors. |
| Keywords: | Political Economy;Anti-immigrant Parties;Electoral competition;Party Platform;Immigration |
| JEL: | F22 P16 D72 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cii:cepidt:2025-20 |
| By: | Chi-Young Choi; Ilan Noy; Ashish Sedai |
| Abstract: | This study investigates how natural disasters and federal disaster declarations influence electoral outcomes in U.S. presidential elections from 1996 to 2020. Using county-level panel data and a two-way fixed effects framework, we analyze both incumbent vote share and voter turnout to describe the mechanisms linking disasters to political accountability. We find that severe disasters significantly reduce the incumbent party's vote share, consistent with the retrospective voting hypothesis. However, Presidential Disaster Declarations (PDDs) substantially mitigate these electoral losses, particularly in politically aligned urban areas, supporting the attentive retrospection hypothesis. Disasters tend to suppress voter turnout moderately, and PDDs only partially offset this effect, suggesting that disasters primarily harm incumbents by prompting voters to switch to the opposition rather than by discouraging their supporters from participating. Categorical analyses further reveal that partisan alignment, rather than PDD issuance alone, consistently drives electoral responses. Overall, our findings highlight how institutional coordination and federal aid shape democratic accountability in the wake of natural disasters. |
| Keywords: | disasters, elections, vote share, disaster declaration, U.S. county, voter turnout |
| JEL: | D72 N42 O18 P16 Q54 R10 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12298 |
| By: | Luca J. Uberti; Drini Imami; Mariapia Mendola |
| Abstract: | We examine the impact of an election campaign on the labor market outcomes of incumbent party supporters. Using unique data on voters' political preferences during a critical pre-election period in Albania, our difference-in-differences estimates show that supporting the ruling party prior to elections significantly improves individuals' employment and earnings. This labor market premium is particularly pronounced among individuals with low costs of campaign participation, whereas patronage jobs are concentrated in lower-tier public sector positions. Administrative data further show that job distribution to party supporters strongly correlates with increased vote shares for the incumbent. Our findings suggest that parties strategically allocate public employment to mobilize grassroots supporters and secure votes—a practice that fosters corruption and weakens democratic institutions. |
| Keywords: | Job patronage; political corruption; vote-buying; Albania; post-communist transition. |
| JEL: | D72 D73 H83 J45 M59 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:mib:wpaper:561 |
| By: | Fasani, Francesco (University of Milan); Ferro, Simone (University of Milan); Romarri, Alessio (University of Milan); Pasini, Elisabetta (Alma Economics) |
| Abstract: | This paper provides the first causal evaluation of the political impact of asylum seekers in the UK. Although dispersed across areas on a no-choice basis, political bargaining between central and local governments introduces potential endogeneity in their allocation. We address this with a novel IV strategy exploiting predetermined public-housing characteristics. For 2004–2019, we estimate a sizeable increase in the Conservative–Labour vote-share gap in local elections: a one within-area standard-deviation increase in dispersed asylum seekers widens the gap by 3.1 percentage points in favour of the Conservatives. We find similar rightward shifts in national elections, survey data on voting intentions, and the Brexit Leave vote. UKIP also gains, though less robustly. No effect appears for non-dispersed asylum seekers, who forgo subsidised housing and choose residences independently. Turning to mechanisms, voters move rightward without becoming more hostile towards foreigners. Using the universe of MPs’ speeches, we show that Conservative representatives from more exposed areas emphasise asylum and migration more, with no systematic change in tone or content. Heightened issue salience appears to drive voters’ choices. |
| Keywords: | Brexit, elections, refugees, MP’s speeches |
| JEL: | F22 D72 J15 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18297 |
| By: | Peter Shum |
| Abstract: | Classical spatial models predict platform convergence, yet empirical polarization persists. This paper proposes a non-electoral mechanism: lobbying as a monopsonistic market for legislative support. Here, extreme benefactors must pay more to attract distant politicians, creating a rent gradient that rewards platform differentiation. We find that the unique equilibrium places politicians at $(\frac{1}{4}, \frac{3}{4})$ for any monotone policy-production cost. Thus, polarization can arise solely from lobbying-market structure, independent of electoral incentives. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.01796 |
| By: | Naudé, Wim (RWTH Aachen University) |
| Abstract: | This paper focuses on the relationship between capitalism and the decline in democracy in the West over the past quarter-century. Using data from the V-Dem Institute, Freedom House, and the World Inequality Database, a strong correlation is found between inequality, the rise of tech billionaires, and democratic erosion. This correlation is explained by describing how tech oligarchs grow their political influence through their digital platforms, and their societal control via surveillance and influence of sense-making. The pivot of tech oligarchs toward the Military Industrial Complex (MIC) will accelerate the erosion of democracy. The implication is that efforts to regulate the digital economy to protect democracy will not be effective unless accompanied by decisive measures to break up the oligarchy and dismantle the Permanent War Economy. |
| Keywords: | capitalism, inequality, oligarchy, democracy |
| JEL: | P16 D31 O33 O40 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18293 |
| By: | Kundan Mukhia; Buddha Nath Sharma; Salam Rabindrajit Luwang; Md. Nurujjaman; Chittaranjan Hens; Suman Saha; Tanujit Chakraborty |
| Abstract: | We study how the 2024 U.S. presidential election, viewed as a major political risk event, affected cryptocurrency markets by distinguishing human-driven peer-to-peer stablecoin transactions from automated algorithmic activity. Using structural break analysis, we find that human-driven Ethereum Request for Comment 20 (ERC-20) transactions shifted on November 3, two days before the election, while exchange trading volumes reacted only on Election Day. Automated smart-contract activity adjusted much later, with structural breaks appearing in January 2025. We validate these shifts using surrogate-based robustness tests. Complementary energy-spectrum analysis of Bitcoin and Ethereum identifies pronounced post-election turbulence, and a structural vector autoregression confirms a regime shift in stablecoin dynamics. Overall, human-driven stablecoin flows act as early-warning indicators of political stress, preceding both exchange behavior and algorithmic responses. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.00893 |
| By: | Rino Heim; Benedikt Marxer |
| Abstract: | This paper examines the causal impact of citizen-initiated ballot measures, defined as initiatives and veto referendums, on state government revenues and expenditures. Across U.S. states, direct democratic institutions have been introduced at different points in time, creating a setting that allows for causal identification. Leveraging a newly compiled panel dataset spanning from 1890–2008 with detailed contextual information, we apply a partially pooled synthetic control method that constructs counterfactuals based on both within-state and cross-state pre-treatment imbalances. The results indicate that the adoption of citizen-initiated ballot measures has no significant effect on state fiscal outcomes. We further show that signature requirements for launching ballot measures are uncorrelated with their actual frequency, helping to explain why we do not find a difference between direct and indirect fiscal effects. The findings are robust across model specifications and institutional contexts. This research offers new insights into the fiscal implications of citizen-initiated legislation. |
| Keywords: | direct democracy, public economics, representation, state government |
| JEL: | D72 H71 H72 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12297 |
| By: | Chunxiao Lu (University of Canterbury) |
| Abstract: | I examine how firm-level political connections impact stock returns through institutional demand. I find that demand shifts by mutual funds significantly contribute to the decline in concurrent stock returns: mutual funds generally reduce holdings of stocks with higher political connections, especially those headquartered in provinces with elevated corruption indices, following the 2012 Chinese anti-corruption campaign announcement. Overall, while political connections have an insignificant direct effect on stock returns as an additional pricing factor, they significantly and negatively impact stock returns through the fund demand channel. Under a characteristic-based demand asset pricing framework, I further investigate the aggregate price impact for stocks with different political connections. I show that stocks with stronger political connections experience greater price impacts, particularly among the least liquid stocks and around the announcement of the 2012 anti-corruption campaign. This demand-based approach offers a novel perspective to understand the decrease in stock returns, isolates the effects of political connections from those of corruption, and emphasizes the demand-side effects on increased volatility during periods marked by unexpected political events. |
| Keywords: | Demand shifts, political connection, corruption, stock returns, mutual fund, institutional investor, demand elasticity |
| JEL: | G11 G12 G15 G18 |
| Date: | 2025–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:cbt:econwp:25/15 |
| By: | Alemanno, Alberto |
| Abstract: | This paper unpacks and discusses the notion of EU leadership, a concept that - like democracy – is more often invoked than defined in public discourse. Its proposed taxonomy distinguishes and defines several typologies of EU leadership – the institutional, the political, and the external ‘leaderships’ of and in the European Union. It argues that despite the existence of these distinct characterisations, no genuine, EU-wide European leadership exists today insofar as the EU does not constitute ‘a distinct, coherent, and autonomous political space’. This lack of political integration has, in turn, contributed to yet another form of leadership, technocratic in nature. While technocracy is not new in EU integration, it nevertheless lacks any form of democratic legitimacy. Among the obstacles to the emergence of a genuinely European leadership is that citizens have got used to this ‘democracy without politics’. At the same time, EU leaders are being pushed to clarify their goals and step forward, not the least due to external forces acting against the EU. The paper predicts that numerous attacks on the EU project—be it from the US administration and its plutocratic supporters, Russia’s hybrid campaigns, or China’s trade and geopolitical projections—are set to further put the very notion of EU leadership to the test while giving it the chance to acquire new meaning. |
| Keywords: | Leadership; EU |
| JEL: | K00 |
| Date: | 2025–05–12 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:heccah:1565 |
| By: | Alemanno, Alberto; Giufre, Marco |
| Abstract: | As civil society strives to navigate a new political landscape dominated by radical, mostly far-right, representatives, this policy analysis offers an analytical framework capable of assisting its organisations in making informed decisions and balancing the risks and opportunities stemming from such engagement. It highlights critical questions to help organisations assess whether and how to engage with far-right actors, notably contextual factors (what influence does the far-right representative actually wield, and how does it impact your organisation's goals?), ethical concerns (Are the views of these actors compatible with democratic principles and human rights?), and strategic gains (Are there tangible benefits to engagement that outweigh potential reputational and ideological risks?). If much of civil society has historically refused to engage with the far right, it did so because of incompatible values but also due to these parties’ previously marginal or limited role. To maintain such an ideological stance may reveal more challenges in the 2024-2029 political cycle. This legislature may force civil society to reconsider its traditional stance and determine whether to engage with the far right based on the risks and perceived opportunities stemming from such an engagement. This appears inevitable insofar as far-right representatives do chair EP parliamentary committees, sit in the EU College of Commissioners or are part of the government at the national level, to name a few examples. This guidance document balances the pragmatic need to engage with controversial political representatives and parties and remain true to the organisations’ core values. |
| Keywords: | political group; European Union |
| JEL: | K00 |
| Date: | 2025–03–17 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:heccah:1566 |
| By: | Nadav Kunievsky |
| Abstract: | In democracies, major policy decisions typically require some form of majority or consensus, so elites must secure mass support to govern. Historically, elites could shape support only through limited instruments like schooling and mass media; advances in AI-driven persuasion sharply reduce the cost and increase the precision of shaping public opinion, making the distribution of preferences itself an object of deliberate design. We develop a dynamic model in which elites choose how much to reshape the distribution of policy preferences, subject to persuasion costs and a majority rule constraint. With a single elite, any optimal intervention tends to push society toward more polarized opinion profiles - a ``polarization pull'' - and improvements in persuasion technology accelerate this drift. When two opposed elites alternate in power, the same technology also creates incentives to park society in ``semi-lock'' regions where opinions are more cohesive and harder for a rival to overturn, so advances in persuasion can either heighten or dampen polarization depending on the environment. Taken together, cheaper persuasion technologies recast polarization as a strategic instrument of governance rather than a purely emergent social byproduct, with important implications for democratic stability as AI capabilities advance. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.04047 |
| By: | Emilio Ocampo; Nicolás Cachanosky |
| Abstract: | Exchange rates reflect macroeconomic fundamentals, which in turn are regime dependent. In politically unstable countries, expectations of regime change can have a significant impact on exchange rate dynamics. We exploit Argentina’s unexpected 2019 primary election results as a natural experiment to gauge the impact of a change in such expectations. When populist candidate Alberto Fernández’s victory margin (15.6%) doubled pre-election polling predictions (7.2%), financial markets immediately recalculated the probability of a change in regime. Using parallel market exchange rates, we estimate that the real exchange rate differential between populist and non-populist regimes exceeds 100%. This large gap creates extreme political sensitivity: regime change expectations of 7-16% can trigger 10% exchange rate movements. Our findings help explain persistent exchange rate volatility in emerging economies and highlight the limitations of purely macroeconomic stabilization approaches when political sustainability is uncertain. |
| Keywords: | exchange rates, regime uncertainty, Argentina |
| JEL: | E42 E52 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cem:doctra:908 |