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on Positive Political Economics |
| By: | Alexandre Chirat (CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE]); Cyril Hédoin (REGARDS - Recherches en Économie Gestion AgroRessources Durabilité Santé- EA 6292 - URCA - Université de Reims Champagne-Ardenne - MSH-URCA - Maison des Sciences Humaines de Champagne-Ardenne - URCA - Université de Reims Champagne-Ardenne, CRIEG - Centre de Recherche Interdisciplinaire Economie Gestion - MSH-URCA - Maison des Sciences Humaines de Champagne-Ardenne - URCA - Université de Reims Champagne-Ardenne) |
| Abstract: | This paper deduces conditions under which populism successfully emerges in democratic contexts. Building on Downs's economic theory of democracy, it hinges on three assumptions: uncertainty, rationality, and democratic stability. This theory considers three main types of agents: citizens, political parties, and information providers. We demonstrate that the necessary and sufficient conditions for a populist party to emerge and gain significant electoral support are 1) a political disequilibrium between demand (citizens' preferences) and supply (parties' platforms) combined with 2) democratic instability due to ideological polarization. Such conditions provide the rationale behind populist anti-elitism and its thin nature as an ideology. Since this paper provides a theoretical account of populism that, while sharing Downsian roots, differs from main political economy models of populism, we provide a systematic comparison. In particular, we show that the conditions under which the Median Voter Theorem is relevant are at odds with the conditions required to account for populism. |
| Keywords: | Populism -Uncertainty -Rationality -Public interest -democratic stability |
| Date: | 2025–11–02 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05414427 |
| By: | Titelman, Noam; Prieto, Joaquin |
| Abstract: | What is the effect of experiencing good or bad macroeconomic environments on political and economic attitudes? Despite decades of research, this central question in political economy remains unsettled. We advance this debate in two ways: by examining the effects of both positive and negative macroeconomic environments simultaneously, and by focusing on their cumulative impact over individuals’ lifetimes. We address this question by examining how lifetime exposure to macroeconomic positive and negative periods shapes political and economic attitudes in Latin America. We combine annual GDP per capita data from the Maddison Project (1896–2022) with nearly 700, 000 individual responses from Latinobarómetro and LAPOP (1995–2021) to construct life-course measures of positive and negative periods for respondents in 18 countries. Our identification strategy compares cohorts within country–year using models with country, survey-year, age, cohort, and survey fixed effects. Repeated positive macroeconomic periods systematically shift individuals toward the right on a left–right scale and improve subjective economic evaluations. In contrast, repeated negative periods do not produce a consistent leftward shift; instead, they increase economic insecurity, dissatisfaction with democratic performance, and anti-elite sentiment. Support for democracy as a principle remains stable. We confirm the generalizability of our main findings by replicating our analyses in 104 countries using the Integrated Values Survey (1980-2022). |
| Date: | 2026–02–12 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:29ytf_v1 |
| By: | González, Felipe; Prem, Mounu |
| Abstract: | We study the economic effects of a large nationalization program using newly assembled firmlevel data from Chile under Salvador Allende (1970-73). Using a difference-in-differences design, we show that nationalization substantially reduced firm performance and international business activity relative to comparable private firms. Return on assets fell sharply and importing activity declined, with negative effects concentrated in manufacturing, while firms in strategic and natural resource sectors were largely unaffected. We also document lower electoral support for the incumbent coalition in more exposed municipalities. Overall, nationalization generated sizable and uneven economic costs with significant political consequences. |
| Keywords: | nationalization, state-owned enterprises, firm performance |
| JEL: | L33 D72 N36 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1715 |
| By: | Picchio, Matteo; Santolini, Raffaella |
| Abstract: | We study the role of mayoral gender in attracting public funding in Italian municipalities. We exploit a novel administrative dataset containing detailed information on all projects aimed at the digitalisation of local public administrations and funded under Italy's National Recovery and Resilience Plan between 2022 and 2024. Exogenous variation in the timing of municipal elections and switches from male to female mayors provides quasi-experimental identification within a staggered difference-in-differences framework. We find that female mayors attract significantly larger amounts of national public funding for the digitalisation of municipal administrative services. This effect is particularly strong when female leadership is combined with high levels of human, or supported by a high quality local bureaucrats, and a policy environment characterised by substantial funding opportunities. By contrast, the share of women in municipal councils and executives does not play a significant role. We also find that our main results are driven by small and territorially fragile municipalities. |
| Keywords: | public funding, female political leadership, local governments, difference-in-differences, event-study, causal inference |
| JEL: | D72 H72 H76 J16 R58 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1712 |
| By: | Gouasmi, zeineb; El Ferktaji, riadh |
| Abstract: | The revolutions in the MENA region countries were experienced as a negative economic shock. This led to popular demands and, at the same time, a worsening of public finances in a climate of political instability. It is therefore relevant to address the question: Is the reduction of the budget deficit dependent on explanatory political variables such as democracy and political stability? In this article, we examined the relationship between the budget deficit and political instability/democracy while using other macroeconomic control variables, such as GDP growth, the consumer price index, and oil prices. This relationship was estimated for a sample of MENA region countries using a dynamic panel data econometric model over the period 2008-2019. The results of this article show that political instability and democracy have a significant impact on the budget deficit in the selected group of MENA region countries. Specifically, the model's estimation found that the democratic political regime positively impacts the budget balance. |
| Keywords: | Budget Deficit. Political instability. MENA Region |
| JEL: | C4 D72 H62 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127249 |
| By: | Clara Ponsati; Jan Zapal |
| Abstract: | A finite group of voters must elect the pope from a finite set of candidates. They repeatedly cast ballots (possibly for ever) until one candidate attains at least Q votes. A candidate is electable—if enough voters prefer him to a continuous disagreement—as well as stable—if no other candidate is preferred to him by a sufficient number of voters. We provide a necessary and sufficient condition for the existence of a candidate that is both electable and stable. When there are three candidates and voters are willing to compromise somewhat, the condition requires choice by two-thirds supermajority, which coincides with the procedure that the Catholic Church has used to appoint the pope for almost a millennium. |
| Keywords: | repeated ballots, conclave, pope, electable, stable, supermajority |
| JEL: | D71 D72 Z12 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cer:papers:wp815 |
| By: | Dominik Suri (University of Bonn); Simon Gächter (University of Nottingham); Sebastian Kube (University of Bonn); Johannes Schultz (University of Bonn) |
| Abstract: | Democratic societies depend on citizens following rules even when those rules are set by political opponents. Rising polarization may threaten this behavior. We test the impact of polarization on rule compliance in the United States across three pre-registered waves (May and November 2024; April 2025; n = 8, 340) using the "coins task", which is a non-political, generic rule-following task, where breaking the rule increases payoffs. Participants were randomly assigned to follow rules set by the experimenter, a political co-partisan, a political opponent, or a non-partisan US citizen. Rule compliance ranged from 52.3% to 57.8%, and equivalence testing indicates no meaningful differences across waves or partisan rule-setter identities. However, greater affective distance from partisan rule setters is associated with lower compliance and weaker descriptive and normative beliefs about rule-following. These findings suggest that rule compliance is resilient to the rule-setter's identity. While affective polarization may erode this behavior somewhat, substantial compliance remains: the human tendency to follow rules, even when incentivized to break them, survives the "stress test" of partisan rule-setting in highly polarized times |
| Keywords: | Political polarization, affective polarization, rule-following, coins task, norms, online experiments, political identity, equivalence testing, replication |
| JEL: | C91 D72 D91 Z13 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:388 |
| By: | Yunus C. Aybas; Oguzhan Celebi; Surabhi Dutt |
| Abstract: | State delegations are often chosen through single-member district elections, creating a tension between respecting district majorities and reflecting the statewide electorate. First-past-the-post (FPTP) follows each district's majority but can yield a delegation seat share far from the party's statewide vote share. In contrast, proportional representation (PR), which makes a party's seat share correspond to its statewide vote share, requires departing from local majorities in some districts. We measure misrepresentation as a weighted sum of within-district misrepresentation, measured by the share of voters locally represented by their non-preferred party, and statewide misrepresentation, measured by the deviation of a party's seat share from its statewide vote share. The misrepresentation-minimizing rule is a cutoff rule determined by the relative weight of statewide misrepresentation. As this weight rises, the cutoff continuously shifts from FPTP's 50% to the PR cutoff that aligns the delegation's seat share with statewide vote shares. This shift makes gerrymandering harder, offering an alternative lever to limit gerrymandering. Using a majorization-based metric of geographic concentration, we show that concentrating support reduces misrepresentation only under the misrepresentation-minimizing rule. Within this class, FPTP and PR are uniquely characterized by the absence of cross-district spillovers and by gerrymandering-proofness, respectively. Using U.S. House elections, we infer the weights that rationalize outcomes, offering a novel metric for evaluating representativeness of district boundaries and electoral reform proposals. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.12910 |
| By: | Federico Fioravanti; Zoi Terzopoulou |
| Abstract: | This work contributes to a foundational question in economic theory: how do individual-level cognitive biases interact with collective choice mechanisms? We study a setting where voters hold intrinsic preference rankings over a set of alternatives but cast approval ballots to determine the collective outcome. The ballots are shaped by an anchoring bias: alternatives are presented sequentially by a social planner, and a voter approves an alternative if and only if it is acceptable and strictly preferred to all alternatives previously encountered. We first analyze which approval-based voting rules are anchor-proof, in the sense that they always select the same winner regardless of the presentation order. We show that this requirement is extremely demanding: only very restrictive rules satisfy it. We then turn to the potential influence of the social planner. On the upside, when the planner has no information about the voters' intrinsic preferences, she cannot manipulate the outcome. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.04494 |
| By: | Gento Kato (School of Political Science and Economics, Meiji University); Yuma Oshida (School of Political Science and Economics, Meiji University); Rikuto Oi (School of Political Science and Economics, Meiji University); Hiroyoshi Shibata (School of Political Science and Economics, Meiji University); Shogo Karube (School of Political Science and Economics, Meiji University) |
| Abstract: | Do democratic voters prioritize civilian control over the arbitrary decisions of the military? Shinomoto (2025) examined this question in Japan through a survey experiment and concluded that average voters lose trust in the Japan Self-Defense Forces (JSDF) when the JSDF does not follow the orders of the Japanese Prime Minister. This study revisits this finding by conducting a survey experiment that examines Japanese voters’ trust in both the JSDF and the Japanese Prime Minister under plausible alternative scenarios of the JSDF’s dovish noncompliance with the Prime Minister’s hawkish orders. We find that (1) through its noncompliance, the JSDF loses trust from right-wing voters but gains trust from left-wing voters; and (2) the JSDF’s noncompliance reduces trust in the Prime Minister. The findings imply that Japanese voters’ reactions to failures in civilian control are largely based on personal values rather than a democratic value: they evaluate military noncompliance positively if it aligns with their ideology and lose confidence in their democratically-elected leader if his policies are vetoed by the military. These implications from a country with long-standing skepticism toward the military raise additional concerns about the civil-military relationship in democratic politics. |
| Keywords: | civil–military relations, survey experiment, Japan, democracy |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:2530 |
| By: | Matthew T. Cole (Department of Economics, California Polytechnic State University); James Lake (Department of Economics, University of Tennessee); Ben Zissimos (Department of Economics, University of Exeter) |
| Abstract: | International environmental agreements (IEAs) often condition entry into force on ratification by a minimum number of countries, yet deep environmental commitments frequently face strong domestic political resistance. We study how IEA breadth, through minimum ratification thresholds (MRTs), and depth are jointly determined when domestic ratification incentives are endogenous. In our model, lobbying competition between pro- and anti-environmental interest groups shape domestic ratification outcomes, and lobbying incentives depend on expectations about ratification in other countries. MRTs affect domestic political incentives by altering the pivotality of a country’s ratification for entry into force and the extent to which global emissions externalities are internalized. As a result, deeper agreements optimally feature lower MRTs: governments relax breadth requirements to offset endogenous domestic political resistance to more ambitious environmental commitments. Our analysis provides a political-economy foundation for the breadth–depth trade-off and offers a novel perspective on free riding that operates through domestic political effort rather than participation or enforcement mechanisms. |
| Keywords: | International environmental agreements, Miniumum ratification thresholds, Contest, Ratification, Lobbying, Domestic polictial economy, Breadth-depth trade-off, Free riding |
| JEL: | Q54 H41 D72 F53 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:cpl:wpaper:2601 |
| By: | Bursztyn, Leonardo; Kolstad, Jonathan T.; Rao, Aakaash; Tebaldi, Pietro; Yuchtman, Noam |
| Abstract: | Politicising policies designed to address market failures can diminish their effectiveness. We document a pattern of ‘political adverse selection’ in the health insurance exchanges established under the Affordable Care Act (colloquially, ‘Obamacare’): Republicans enrolled at lower rates than Democrats and independents, a gap driven by healthier Republicans. This selection raised public subsidy spending by approximately $155 per enrollee annually (3.2% of average cost). We fielded a survey to show that this selection does not exist for other insurance products. Lower enrolment and higher costs are concentrated in more Republican areas, potentially contributing to polarised views of the policy. |
| Keywords: | political polarisation; ideology; adverse selection; health insurance; healthcare reform |
| JEL: | P00 H40 H51 |
| Date: | 2026–02–02 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129368 |
| By: | Besley, Timothy; Brzezinski, Adam; Fazzio, Jake |
| Abstract: | This article discusses how economic policy narratives can be framed as part of the study of policy formation based on insights from an emerging literature. We offer a taxonomy that distinguishes between causal and moral policy narratives. We analyse how the political success of policy narratives depends on alignment with the interests of voters and is influenced by motivated reasoning. We then show how large language models can be used to study policy narratives through an application to narratives on the size of government voiced in the UK House of Commons over 1950–2023. |
| Keywords: | narratives; motivated reasoning; size of government |
| JEL: | R14 J01 J1 |
| Date: | 2026–02–02 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137241 |
| By: | Kittel, Rebecca; Silva, Bruno Castanho |
| Abstract: | Politicians can adjust the complexity of their communication to signal different things to different audiences: more complex language can indicate competence, while lower complexity may bring them closer to "common people". These strategic shifts in complexity, however, remain understudied. We ask what individual and contextual factors relate to politicians' use of more or less complex language in their communication, with a dataset matching 116, 000 parliamentary speeches from 15 countries with 800, 000 contemporaneous Facebook posts from the same MPs between 2018 and 2021, and apply measures of language complexity to each. Results show that women use more complex language in parliament, and that far-right politicians, while similar to others in parliamentary speech, simplify their language the most on social media, and benefit the most from higher engagement with their simpler posts. These results show new dimensions of how politicians strategically adapt their communication styles to the audience. |
| Keywords: | Language Complexity, Strategic Communication, Parliamentary Discourse, Social Media, Political Communication |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wzbccs:336795 |
| By: | Chloe N. East; Caitlin Patler; Elizabeth Cox |
| Abstract: | Deportation is often framed as a necessary tool to protect public safety by removing people who commit crimes. We use newly available, and externally validated, administrative data containing all US Immigration and Customs Enforcement (ICE) arrests from September 2015-October 2025. Beyond demonstrating national trends in immigration arrests by method and composition over time, we are also able to compare, for the first time, apprehensions spanning the start of the two Trump administrations, both of which focused on mass immigration enforcement. Our results reveal that the reality of immigration enforcement diverges sharply from the public narrative: while arrests spiked at the outset of both Trump presidencies, there were significant declines in the percentage of arrested individuals with criminal convictions, with especially marked declines in 2025. Examining potential mechanisms reveals that this is driven by a change in ICE tactics, but even conditional on tactic, as arrests rose, the percent with a criminal record declined. Moreover, we find substantial heterogeneity over time and across ICE Areas of Responsibility. Taken together, our results highlight a substantial gap between political rhetoric and reality. |
| JEL: | H50 J0 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34794 |
| By: | Richard N. Langlois (University of Connecticut) |
| Abstract: | I hope to accomplish two things in this paper. First, I will examine my early engagement with Schumpeter and my work analyzing his ideas. This will include (1) my efforts to challenge the notion that Schumpeter somehow changed his views on entrepreneurship and (2) my reconstruction of his perspective on managerialism and my interpretation of what he truly meant by the “obsolescence of the entrepreneur.” Second, I will consider Schumpeter as a Public Choice theorist, reflecting on his contributions to that field in the context of today’s contested populist political environment, contrasting his approach with that of the Virginia School of Public Choice. |
| JEL: | B25 B31 D71 D83 P1 P3 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:uct:uconnp:2026-01 |
| By: | Besley, Timothy; Dann, Chris; Dray, Sacha |
| Abstract: | This article explores the relationship between economic growth and trust in government using variation in GDP growth experienced over a lifetime since birth. We assemble a newly harmonized global data set across 11 major opinion surveys, comprising 3.3 million respondents in 166 countries since 1990. Exploiting cohort-level variation, we find that people who have experienced higher GDP growth are more prone to trust their governments, with larger effects found in democracies. Higher-growth experiences are also associated with improved perceptions of government performance and living standards. We find no similar channel between growth experience and interpersonal trust. Second, more recent growth experiences appear to matter most for trust in government, with no detectable effect of growth experienced during one’s formative years, closer to birth, or before birth. Third, we find evidence of a “trust paradox” whereby average trust in government is lower in democracies than in autocracies. Our results are robust to a range of falsification exercises, robustness checks, and single-country evidence using the American National Election Studies and the Swiss Household Panel. |
| JEL: | D84 D91 H11 O12 |
| Date: | 2026–02–04 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129614 |
| By: | Nolke, Andreas; Schnyder, Gerhard; Sallai, Dorottya; Kinderman, Daniel |
| Abstract: | The treatment of foreign multinational enterprises (MNEs) by populist right-wing governments presents a puzzle: At times, these governments support, at times they take aggressive action against foreign MNEs. Allegorically speaking, rather than using their one hundred hands to slay the Titans like the Centimanes of Greek mythology, right-wing populist governments seem to use fifty hands of the state to support and fifty others to handicap foreign MNEs. How can we explain the ambiguity of populist international business policy adopted by governments that adhere to economically nationalist rhetoric, ideologies, and goals? Our article contributes to these debates by theorising the factors that determine right-wing populist governments’ multi-handed approach to MNEs. We empirically discuss these factors based on a mixed methods design by comparing host country cases (Hungary, Poland), home country cases (China/Russia vs. Western countries), and industry cases (finance, manufacturing). We demonstrate that the common denominator of the multi-handed approach by right-wing populist governments is their desire to decrease the presence of foreign multinationals in politically valuable sectors, but that this desire is tempered by political and economic restrictions, notably including their electoral fragility, the need for technology transfer, and limited alternative sources of foreign direct investment (FDI). |
| Keywords: | East Central Europe; right-wing populism; economic policy; foreign direct investment; multinational enterprises |
| JEL: | L81 |
| Date: | 2026–02–07 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137314 |
| By: | Ruiz, Mark Gerald C.; Miral, Ramona Maria L.; Rivera, John Paolo R. |
| Abstract: | The transmission of election shocks in the Philippine economy was evaluated using an augmented macroeconometric model that incorporates political business cycle (PBC) dynamics into the country’s macroeconomic framework. Building upon the model developed by Debuque-Gonzales and Corpus (2023, 2024), quarterly data from 2002 to 2023 was utilized to simulate the effects of election-induced fiscal and private sector behavior on key macroeconomic variables, namely private consumption, employment, investment, and government consumption. Results reveal that election years generate short-term, demand-driven expansions, fueled by increased government spending, campaign activities, and temporary job creation. However, these effects are transitory, with economic activity reverting to near baseline levels post-election as fiscal impulses fade. Findings align with established literature on political budget cycles, confirming that election-driven growth is cyclical rather than structural and may induce inefficiencies in expenditure allocation and fiscal discipline. The study highlights the need for institutional reforms, fiscal transparency, and counter-cyclical policies to mitigate volatility and promote long-term stability. Finally, limitations related to model stability, pandemic disruptions, and evolving post-COVID economic structures suggest avenues for recalibrating and refining the macroeconometric model for future applications. Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph. |
| Keywords: | election shocks, macroeconometric modeling, political business cycles |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:phd:dpaper:dp_2025-60 |
| By: | Nicholas Bloom; Christos Makridis |
| Abstract: | Using new data from the Gallup Workforce Panel, we document a persistent partisan gap in self-reported AI use at work: Democrats are consistently more likely than Republicans to report frequent use. In 2025:Q4, for example, 27.8% of Democrats report using AI weekly or daily, compared with 22.5% of Republicans. Democrats also report deeper task-level integration, using AI in 16% more work activities than Republicans. Consistent with this, Democrats are employed in occupations with higher predicted AI exposure based on task-content measures and report larger perceived differences in AI-related job displacement risk. However, in regression models the partisan gap in AI use disappears once we control for education, industry, and occupation, indicating that observed differences primarily reflect compositional variation rather than political affiliation per se. |
| JEL: | J0 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34813 |
| By: | Bai Yu; Li Yanjun; Liu Xinyan |
| Abstract: | Little is known about the historical origins of political instability, and systematic empirical evidence remains limited. This paper addresses this gap by examining the historical determinants of political instability through the lens of the millennia-long centralized authoritarian monarchy in imperial China. Exploiting proximity to imperial capitals as a proxy for the strength of centralized statehood, we show that counties historically exposed to stronger and more persistent state penetration exhibit significantly lower levels of political instability today, as reflected in a lower incidence of anti-government protests. Our results further suggest that cultural transmission, rather than sustained development, demographic change, or institutional continuity, is the primary channel through which the legacy of long-defunct institutions endures. |
| URL: | https://d.repec.org/n?u=RePEc:toh:tupdaa:79 |