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on Positive Political Economics |
| By: | Thomas Buser (University of Amsterdam) |
| Abstract: | I analyze Dutch panel data that contains rich information on voting, political opinions, and personality traits. I show that "adversarial" preferences – competitiveness, negative reciprocity, distrust, and selfishness – are strong predictors of right-wing and populist political preferences. Their explanatory power is similar to that of a rich set of socioeconomic status indicators – including income, education and occupation – and robust to non-parametrically controlling for them. I replicate previously studied associations between classic personality traits and political preferences, and show that adversarial preferences predict voting independently from these traits – and often with larger effect sizes. The complex Dutch party landscape allows me to go further than simple left-right comparisons to differentiate parties along an economic left-right axis, a social progressive-conservative axis, and a populism axis. Competitiveness predicts voting for economically right-wing parties, whereas negative reciprocity, distrust, and selfishness are stronger predictors of voting for socially conservative and populist parties. |
| Keywords: | voting, political preferences, personality, competitiveness, reciprocity |
| JEL: | D72 D9 J16 |
| Date: | 2024–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20240001 |
| By: | Yongquan Cao; Ms. Era Dabla-Norris; Enrico Di Gregorio |
| Abstract: | We study the supply of fiscal ideas leveraging thousands of electoral platforms from 65 countries in the Manifesto Project to link how political parties discuss fiscal policy with fiscal outcomes. We provide three sets of results. First, fiscal discourse has become increasingly favourable to higher government spending since at least the 1990s in advanced and emerging economies and across the political spectrum. This pattern does not track survey trends in voter preferences, suggesting that parties have played a role in shifting the focus of political campaigns to fiscal issues to win over voters. Second, fiscal discourse turns conservative under more adverse fiscal conditions, including in the aftermath of debt surges and after the adoption of fiscal rules, but only to a limited extent. Third, over the medium-run, relative discourse changes in favor of government expansion and away from fiscal restraint are followed by higher fiscal deficits. Together, our results suggest that adverse shifts in the supply of fiscal ideas could add to fiscal pressures over time. |
| Keywords: | Fiscal Discourse; Fiscal Policy; Elections; Manifesto |
| Date: | 2024–09–16 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/194 |
| By: | Stutzer, Alois; Matter, Ulrich; Balles, Patrick |
| Abstract: | In this survey, we investigate the general mechanisms underlying the political economy of attention and review their empirical relevance, in particular for electoral accountability. The focus is on exogenous or stimulus-driven attention that political actors try to win or divert when pursuing their private interests. The corresponding evidence refers to representatives' reactions to general shifts in media attention and persuasive content as well as to short-term fluctuations in attention when exploiting anticipated attention shifts or attention shocks. In the context of digitization and the Internet, we consider the substitution effects between alternative media sources, the role of algorithmic content selection in informational segregation (or echo chambers), and the new opportunities of individual-level targeting strategies to steer attention. |
| Keywords: | accountability, attention, media, representative democracy, re-election |
| JEL: | D72 D83 L82 L86 |
| Date: | 2024–09–17 |
| URL: | https://d.repec.org/n?u=RePEc:bsl:wpaper:2024/10 |
| By: | Jeffrey Clemens; Julia A. Payson; Stan Veuger |
| Abstract: | The COVID-19 pandemic led to unprecedented levels of federal transfers to state governments. Did this funding increase benefit incumbent politicians electorally? Identifying the effect of revenue windfalls on voting is challenging because whatever conditions led to the influx of cash might also benefit or harm incumbents for other reasons. We develop an instrument that allows us to predict allocations to states based on variation in congressional representation. We find that incumbents in state-wide races in 2020, 2021, and 2022 performed significantly better in states that received more relief funding due to their overrepresentation in Congress. These results are robust across specifications and after adjusting for a variety of economic and political controls. We consistently find that the pandemic-period electoral advantage of incumbent politicians in states receiving more aid substantially exceeds the more modest advantage politicians in these states enjoyed before the pandemic. This paper contributes to our understanding of economic voting and the incumbency advantage during times of crisis as well as the downstream electoral consequences of both the COVID-19 pandemic and of unequal political representation at the federal level. |
| JEL: | H7 H77 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32962 |
| By: | Alvaro Aguirre |
| Abstract: | This paper builds a model of heterogenous agents, incomplete markets and idiosyncratic shocks extended with a political mechanism that allows for realistic party competition. Higher inequality leads to more disperse policy preferences, to which parties respond endogenously distancing themselves from median voter preferences. The polarization of party proposals leads to greater uncertainty before elections, as well as greater policy switches after them, with significant macroeconomic effects. Results are in line with previous empirical evidence linking inequality, polarization and macroeconomic performance. The model is solved introducing political quasi-aggregation, and can be extended to analyze different economic policies and alternative political institutions. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:chb:bcchwp:1011 |
| By: | Balles, Patrick |
| Abstract: | This paper examines the U.S. Supreme Court's 2010 Citizens United decision, which lifted bans on independent expenditures by corporations and unions. Using a difference-in-differences design, the study compares states with and without pre-existing bans, focusing on gubernatorial elections. The results show an 11 percentage point increase in the share of Republican TV ad airings following the removal of independent expenditure bans. This increase is especially pronounced (16 percentage points) in states where only corporate bans were lifted, with total TV ad airtime rising by over 29 hours on average. Negative campaigning also intensified, with a 5.5 percentage point rise in the share of attack ads. Survey and election data show a significant demobilization effect, particularly in states where only corporate bans were removed (3.5-5 percentage point decrease in county-level turnout). Finally, Republican gubernatorial candidates experienced a 7-11 percentage point boost in vote shares following the removal of independent spending bans. |
| Keywords: | campaign finance, Citizens United v. FEC, independent expenditures, voter turnout, television markets, special interest groups, corporate money in politics |
| JEL: | D72 K16 L82 |
| Date: | 2024–09–10 |
| URL: | https://d.repec.org/n?u=RePEc:bsl:wpaper:2024/08 |
| By: | Pablo Ottonello; Wenting Song; Sebastian Sotelo |
| Abstract: | We study the distribution of political speech across U.S. firms. We develop a measure of political engagement based on firms’ communications (earnings calls, regulatory filings, and social media), by training a large language model to identify statements that contain political opinions. Using these data, we document five facts about firms’ political engagement. (1) Political engagement is rare among firms. (2) Political engagement is concentrated among large firms. (3) Firms tend to specialize in specific topics and outlets. (4) Large firms tend to engage in a wider set of topics and outlets. (5) The 2020 surge in firms’ political engagement was associated with an increase in the engagement of medium-sized firms and a change in the mix of political topics. |
| JEL: | C8 D22 D72 G3 L1 M14 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32923 |
| By: | Thilo Nils Hendrik Albers (HU Berlin); Felix Kersting (HU Berlin); Monique Reiske (HU Berlin) |
| Abstract: | Using interwar German agriculture as a case, this paper explores the political cost of debt deflation which we characterize with farmers' leverage ratios. Primary deficits drove their increase during 1924-1928, but deflation pushed them to unsustainable levels during 1929-1932. We construct corresponding exogenous county-level exposure measures and show their effect on economic distress as well as political radicalization. Our results suggest that debt deflation increased the Nazi party's rural vote share by over 8 percentage points relative to a counterfactual baseline scenario and was thus a necessary condition for its rural dominance and ascension to parliamentary power. |
| Keywords: | great depression; weimar germany; nsdap; extremism; debt deflation; economic crisis; |
| JEL: | D72 N13 N54 |
| Date: | 2024–09–28 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:511 |
| By: | Jay Euijung Lee; Martina Zanella |
| Abstract: | We study the dynamic responses of political parties to gender quotas in South Korean municipal councils, a setting with nearly zero women pre-quota. We exploit two unique institutional features: the quota intensity is discontinuous in council size; the quota regulates only one of two election arms. Political parties initially counteract the quota by nominating fewer women in the unregulated arm, but gradually reverse this response over time. Guided by a dynamic model of discrimination, we uncover statistical discrimination with incorrect beliefs about women's competence as the main mechanism driving party behavior. The quota triggers learning through exposure to competent women. |
| Keywords: | gender quota, political parties, discrimination, biased beliefs, learning |
| Date: | 2024–09–03 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2029 |
| By: | Ms. Paola Giuliano; Mr. Antonio Spilimbergo |
| Abstract: | A growing body of work has shown that aggregate shocks affect the formation of preferences and beliefs. This article reviews evidence from sociology, social psychology, and economics to assess the relevance of aggregate shocks, whether the period in which they are experienced matters, and whether they alter preferences and beliefs permanently. We review the literature on recessions, inflation experiences, trade shocks, and aggregate non-economic shocks including migrations, wars, terrorist attacks, pandemics, and natural disasters. For each aggregate shock, we discuss the main empirical methodologies, their limitations, and their comparability across studies, outlining possible mechanisms whenever available. A few conclusions emerge consistently across the reviewed papers. First, aggregate shocks impact many preferences and beliefs, including political preferences, risk attitudes, and trust in institutions. Second, the effect of shocks experienced during young adulthood is stronger and longer lasting. Third, negative aggregate economic shocks generally move preferences and beliefs to the right of the political spectrum, while the effects of non-economic adverse shocks are more heterogeneous and depend on the context. |
| Date: | 2024–09–13 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/195 |
| By: | Alon-Barkat, Saar; Cavari, Amnon; Svartz, Lior |
| Abstract: | Evidence of partisan bias questions the ability of citizens to form meaningful judgments of the functioning of government and hold the government accountable. Existing work demonstrates that incumbent and opposition supporters consistently diverge in their evaluation of government performance in relation to national economy and security and concerning highly polarized policy issues. We argue that in a polarized environment, partisan bias applies not only to citizens' evaluations of macro-policy outcomes but also of mundane tangible public services, such as education, health, policing, and transportation. We provide rigorous empirical evidence for this hypothesis using the case of Israel during the two dramatic, hyper-polarized government changes in 2021 and 2022. The data include two repeated cross-sectional survey datasets: A large seven-wave survey study and an administrative survey dataset by the Israeli Central Bureau of Statistics. Our robust findings question the ability of citizens to hold their government accountable for public service performance, a fundamental feature of democratic theory. |
| Date: | 2024–09–09 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:nkez6 |
| By: | Adrian Casillas; Maryam Farboodi; Layla Hashemi; Maryam Saeedi; Steven Wilson |
| Abstract: | Over the past decade, social media platforms have emerged as prominent vehicles for displaying dissent. In response, various actors have increasingly spread fake news on these platforms to impair the opposition—the (dis)information war. We analyze a methodology to identify disinformation using network-based characteristics of the news initiators, and use data from Twitter (now X) to assess the effectiveness of this method in limiting the spread of disinformation. We find that it detects at least 85% of verified instances of disinformation without misidentifying any true news, and reduces both account engagement and lifespan of disinformation by at least a factor of two, highlighting the importance of swift discovery of disinformation to interrupt its exponential spread. |
| JEL: | A13 D72 L82 P0 Z13 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32896 |
| By: | Ewan McGaughey |
| Abstract: | How has our economic constitutional order developed, and which laws make our economy democratic? Democracy in politics is familiar and starts with ‘one person, one vote’, but economic democracy is less familiar. In its ideal, it means ‘three stakeholders, one voice’. Workers, investors, and service-users make different contribution types in the economy, so rules to give them voice differ and are still evolving. This paper gives a brief history of how economic democracy developed, the evolving theories, and practices for democratic workplaces, capital, and public enterprise. It then unpacks the laws that make it. First, a board of directors will answer to an enterprise’s stakeholders, not simply appointing itself via so called ‘independent’ directors. Second, workers elect at least one-third or properly one-half of a board of directors, rather than shareholders monopolising all votes, and worker cooperatives are encouraged. Third, all capital fund directors, whether pensions or mutuals, are majority-elected by beneficiaries, and they set the shareholder voting policies, not allowing asset managers or banks to vote on other people’s money in what they deem to be the interests of the ultimate investor. Fourth, in public enterprises, where private competition fails and consumers cannot truly ‘vote with their feet’, service-users hold voting rights for representatives on the board, rather than appointments being monopolised by the state or board incumbents. These norms are spreading, and overcoming evidence-free theories that excuse illegitimate corporate power. |
| Keywords: | Economy, democracy, labour, capital, public services, enterprise, vote |
| JEL: | K0 K11 H40 K22 K23 K31 J01 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:cbr:cbrwps:wp539 |
| By: | Sylvain B. Ngassam (Dschang, Cameroon); Simplice A. Asongu (Johannesburg, South Africa); Gildas Tiwang Ngueuleweu (Dschang, Cameroon) |
| Abstract: | This research empirically analyzes the effect of social media on fragility. It goes beyond political grounds which oppose techno-optimistic to techno-pessimistic perceptions of the impact of social media to analyze its consequences on global, Security fragility, economic and social fragilities. The research uses annual data from a panel of 47 African countries for the period 2000–2018. Results reveal that the use of social media by the public to organize offline political actions has no outcome on global fragility. However, its use by elites for the same end accentuates global state fragility. This operates through Security and political fragilities. Fragility is negatively associated with higher civil society participation, education and democracy. The use of social media to organize offline political actions either by people or by elites in the context of higher civil society participation reduces fragility, while its use either by people or by elites in the context of higher educational level accentuates state fragility. The use of social media to organize offline political actions by people in the context of democracy boosts fragility but its use by elites in the same framework reduces fragility. There is a need to sensitize people, especially elites in Africa on the threats and opportunities of social media. There is also a necessity to develop a dynamic, well-educated and well-organized civil society and population in order to better valorize the opportunities that social media represents. |
| Keywords: | Social media, state fragility, security fragility, political fragility, economic fragility and social fragility |
| JEL: | G20 O38 O40 O55 P37 |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:agd:wpaper:24/034 |
| By: | Mircea V. Duca (Baia-Mare, Romania) |
| Abstract: | Democracy represents the engine of societal evolution from an economic and legal standpoint but with a profound impact on the psycho-emotional relationships between individuals engaged in the mechanisms of communal life. Inherent to human beings is only natural right, that ensemble of harmoniously related and innate principles to man, a system that finds its origin in the a priori space of ontological nature. The majority of constitutions pertaining to free states affirm democracy as the sole instrument capable of providing citizens with freedom of conscience, expression, opinion, and last but not least, the decency of life as the primary condition for lifelong education and cultural refinement. This article explores the intricate relationship between democracy, natural law, moral consciousness, and individual autonomy, emphasizing their interconnected roles in developing a just and equitable society. |
| Keywords: | democracy, natural law, positive law, society, religion, culture, education |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:smo:raiswp:0370 |
| By: | Warwick J. McKibbin (Peterson Institute for International Economics; Australian National University); Megan Hogan (Peterson Institute for International Economics); Marcus Noland (Peterson Institute for International Economics) |
| Abstract: | This paper explores policies promoted by former president and now candidate Donald Trump that would potentially affect the global economy. We focus on immigration policy, trade, and erosion of the Federal Reserve Board's political independence. Each policy has differing macroeconomic and sectoral impacts on the United States and other countries. We find, however, that all the policies examined cause a decline in US production and employment, especially in trade-exposed sectors such as manufacturing and agriculture, as well as higher US inflation. The trade policies do little to improve the US trade balance; however, the erosion of Fed independence does so by causing capital outflows, a significant depreciation of the dollar, and higher unemployment toward the end of 2028, which worsen American living standards. Scenarios combining individual policies show that the changes cause a large inflationary impulse and a significant loss of employment (particularly in manufacturing and agriculture) in the US economy. The negative impact of a contraction in global trade is significant for countries that trade with the United States the most. The adverse effect is offset for some economies by the positive effects of an inflow of foreign capital that would otherwise have gone into the US economy. An online dashboard contains a full set of macroeconomic and sectoral results for all countries. The Peterson Institute for International Economics has no partisan goal in publishing this research. Our concerns are about the policies, not the candidate. Our objective is to educate policymakers and the public about the effects these policies would have on Americans and other people around the world. |
| Keywords: | trade policy, migration, deportations, central bank independence, China, Trump |
| JEL: | F1 F13 F17 F22 F37 E58 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:iie:wpaper:wp24-20 |
| By: | Mr. Mario Catalan; Mr. Salih Fendoglu; Tomohiro Tsuruga |
| Abstract: | Do geopolitical tensions between countries influence the cross-border asset allocation of investment funds? Our answer is yes. We estimate gravity models and find that investment funds allocate smaller shares of their portfolios to recipient countries that are geopolitically more distant to their country of origin—with geopolitical distance measured by dissimilarity in countries’ voting behavior in the United Nations General Assembly. We also find an investment diversion effect: a recipient country attracts additional investments when its source countries get geopolitically more distant to third-party countries. These results are robust to instrumenting geopolitical distance and using alternative distance measures. |
| Keywords: | Globalization; geopolitics; geoeconomics; fragmentation; portfolioflows; cross-border; asset allocation; investment funds; gravitymodel; international finance. |
| Date: | 2024–09–13 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/196 |
| By: | Chuang, Shih-Hsien; Holian, Matthew; Pattison, Nathaniel; Ramakrishnan, Prasanthi |
| Abstract: | Funke, Schularick, and Trebesch (2023) investigate the impact of populist leaders on GDP growth in 60 countries. They build an original dataset identifying populist presidents and prime ministers from 1900 to 2020. They then examine changes in countries' GDP growth rates following a populist leader using various empirical methods. They find that 5-15 years after a populist leader, the GDP per capita in that country is lower. Focusing on the panel regression results (Table 2), which we replicate, the authors find a reduction in GDP growth rates of 0.8-1 percentage point per year, with p-values ranging from 0.000 to 0.023. We successfully computationally reproduce these estimates. Second, we recode the variable identifying populist leaders from the authors' source and examine the sensitivity of the estimates to changing the sample time period to include the "war" years of 1915-1945. We find that the results in our main change - using the extended time-period sample - are qualitatively similar to the original results, though with smaller and noisier point estimates. Specifically, the 5-year estimate in Table 2 column 3 changes from -0.97 (p-value 0.02) to -0.43 (p-value 0.2), and the 15-year estimate in Table 3 column 3 changes from -0.73 (p-value 0.01) to -0.53 (p-value 0.17). We then turn to sensitivity analysis regarding small differences in research choices about how to code the start of populist spells and which spells to include in the sample. We find the original results are highly robust to these changes. For example, in our Table 3 column 3, the estimated effect changes from the original -0.73 (p-value 0.01) to -0.75 (p-value |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:i4rdps:157 |