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on Positive Political Economics |
| By: | Becker, Johannes (University of Oxford); Peichl, Andreas (IZA); Rincke, Johannes (University of Munich) |
| Abstract: | This paper deals with the impact of electoral competition on politicians' outside earnings. In our framework, politicians face a tradeoff between allocating their time to political effort or to an alternative use generating outside earnings. The main hypothesis is that the amount of time spent on outside work is negatively related to the degree of electoral competition. We test this hypothesis using a new dataset on outside earnings of members of the German federal assembly. Taking into account the potential endogeneity of measures of political competition that depend on past election outcomes, we find that politicians facing low competition have substantially higher outside earnings. |
| Keywords: | outside earnings, political competition, political rents |
| JEL: | D72 J45 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3902&r=pol |
| By: | Felix Bierbrauer; Lydia Mechtenberg |
| Abstract: | We develop a dynamic model of political competition. Each party has a policymotivated ideological wing and an office-motivated opportunistic wing. A blockade arises if inner-party conflict stops policy implementation. We use this model to study whether early elections should be used to overcome a blockade. They have the advantage that urgent decisions are no longer delayed, and the disadvantage that unsuccessful governments gain additional time in office. This may give rise to a time inconsistency. Voters are in favour of a constitution without early elections. However, in the middle of a political crisis, they are willing to abandon it. |
| Keywords: | early elections, political blockades, ideological rigidities |
| JEL: | D72 D61 D82 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2008-071&r=pol |
| By: | Kawanaka, Takeshi |
| Abstract: | Democracy is not necessarily consolidated simply by the introduction of formal democratic institutions. It is often observed in new democracies that democratic institutions are neglected and eroded in actual practice. Particularly, electoral fraud committed by a ruler is one of the main problems in this regard. This paper deals with two questions, (1) under what conditions does a ruler have an incentive to hold fair elections (or to rig elections), and (2) what makes a ruler prefer to establish an independent election governing institution? Assuming that a ruler prefers to maintain her power, basically she has an incentive to rig elections in order to be victorious in the political competition. A ruler, however, faces the risk of losing power if the opposition stages successful protests on a sufficiently large scale. If opponents are able to pose a credible threat to a ruler, she will have an incentive to hold fair elections. The problem is that information on electoral fraud is not shared by every player in the game. For the opposition, imperfect information deepens their coordination problems. Imperfect information, on the other hand, in some cases causes a problem for a ruler. If the opposition is sufficiently cohesive and have little tolerance of cheating, even unverified suspicions of fraud may trigger menacing protests. In such a case, a ruler has an incentive to establish an independent election commission to avoid unnecessary collisions by revealing the nature of the elections. |
| Keywords: | Democracy, Election, Governance, Democratic consolidation, Institution |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper181&r=pol |
| By: | Bruno Amable (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, CEPREMAP - CEntre Pour la Recherche EconoMique et ses APplications - Ministère de la recherche); Donatella Gatti (CEPN - Centre d'économie de l'Université de Paris Nord - CNRS : UMR7115 - Université Paris-Nord - Paris XIII, IZA - Institute for the Study of Labor, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Normale Supérieure de Paris); Elvire Guillaud (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Normale Supérieure de Paris) |
| Abstract: | In this paper, we highlight the link between the political demand and social policy outcome while taking into account the design of the party system. The political demand is measured by indivudual preferences and the design of the party system is defined as the extent of party fractionalization. This is, to our knowledge, the first attempt in the literature to empirically link the political demand and the policy outcome with the help of a direct measure of preferences. Moreover, we account for an additional channel, so far neglected in the literature : The composition effect of the demand. Indeed, the heterogeneity of the demand within countries, more than the level of the demand itself, is shown to have a positive impact on welfare state generosity. This impact increases with the degree of fractionalization of the party system. We run regressions on a sample of 18 OECD countries over 23 years, carefully dealing with the issues raised by the use of time-series cross-section data. |
| Keywords: | Political demand, party fractionalization, redistribution, time-series-cross-section data. |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00348878_v1&r=pol |
| By: | Alessandra Casella (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579, Economics Department, Columbia University - Columbia University) |
| Abstract: | The paper studies a voting scheme where members of a committee voting sequentially on a known series of binary proposals are each granted a single extra bonus vote to cast as desired - a streamlined version of Storable Votes. When the order of the agenda is exogenous, a simple sufficient condition guarantees the existence of welfare gains, relative to simple majority voting. But if one of the voters controls the order of the agenda, does the scheme become less efficient? The endogeneity of the agenda gives rise to a cheap talk game, where the chair can use the order of proposals to transmit information about his priorities. The game has multiple equilibria, differing systematically in the precision of the information transmitted. The chair can indeed benefit, but the aggregate welfare effects are of ambiguous sign and very small in all parameterizations studied. The theoretical conclusions are tested through laboratory experiments. Subjects have difficulty identifying the informative strategies, and tend to cast the bonus vote on their highest intensity proposal. As a result, realized payoffs are effectively identical to what they would be if the agenda were exogenous. The bonus vote matters; the chair's control of the agenda does not. |
| Keywords: | Storable Votes ; Agenda Power ; Cheap Talk ; Experiments |
| Date: | 2008–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00349292_v1&r=pol |
| By: | Alessandra Casella (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579, Economics Department, Columbia University - Columbia University); Shuky Ehrenberg (Yale Law School - Université Yale - New Haven); Andrew Gelman (Applied Statistics Center Columbia University - Columbia University); Jie Shen (Department of Statistics University of California - University of California - Irvine) |
| Abstract: | Democratic systems are built, with good reason, on majoritarian principles, but their legitimacy requires the protection of strongly held minority preferences. The challenge is to do so while treating every voter equally and preserving aggregate welfare. One possible solution is storable votes: granting each voter a budget of votes to cast as desired over multiple decisions. During the 2006 student elections at Columbia University, we tested a simple version of this idea: voters were asked to rank the importance of the different contests and to choose where to cast a single extra "bonus vote," had one been available. We used these responses to construct distributions of intensities and electoral outcomes, both without and with the bonus vote. Bootstrapping techniques provided estimates of the probable impact of the bonus vote. The bonus vote performs well: when minority preferences are particularly intense, the minority wins at least one of the contests with 15--30 percent probability; and, when the minority wins, aggregate welfare increases with 85--95 percent probability. When majority and minority preferences are equally intense, the effect of the bonus vote is smaller and more variable but on balance still positive. |
| Keywords: | Storable Votes, Referendums, Minorities, Majority Voting, Experiments |
| Date: | 2008–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00349037_v1&r=pol |
| By: | Philip Bond; Hulya Eraslan |
| Abstract: | Prior research on "strategic voting" has reached the conclusion that unanimity rule is uniquely bad: it results in destruction of information, and hence makes voters worse off. We show that this conclusion depends critically on the assumption that the issue being voted on is exogenous, i.e., independent of the voting rule used. We depart from the existing literature by endogenizing the proposal that is put to a vote, and establish that under many circumstances unanimity rule makes voters better off. Moreover, in some cases unanimity rule also makes the proposer better off, even when he has diametrically opposing preferences. In this case, unanimity is the Pareto dominant voting rule. Voters prefer unanimity rule because it induces the proposing individual to make a more attractive proposal. The proposing individual prefers unanimity rule because the acceptance probabilities for moderate proposals are higher. We apply our results to jury trials and debt restructuring. |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:jhu:papers:547&r=pol |
| By: | Anne Elizabeth Stie |
| Abstract: | The EU’s foreign and security policy is often criticised for being undemocratic. The article addresses this contention from the perspective of deliberative democracy. The focus is on the procedural qualities of the second pillar decision-making processes as it is not only the quality of the outcomes that determine the democratic legitimacy of policy-making, but also the way decisions have come about. Against five criteria, the EU’s second pillar procedure is assessed for its putative lack of democratic qualities. The evaluation shows that decision-making is dominated by secrecy and unelected officials who act extensively on behalf of national ministers without proper accountability mechanisms available. Whereas there are conditions conducive to deliberation, they are basically found outside the formal settings and among unelected officials. There are no institutionalised rules where the responsible politicians are obligated to justify policy choices in front of the citizens. Hence the second pillar is only likely to enhance elite deliberation. |
| Keywords: | deliberative democracy; institutions; legislative procedure; legitimacy; political science |
| Date: | 2008–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:erp:reconx:p0039&r=pol |
| By: | James A. Robinson; Ragnar Torvik |
| Abstract: | We develop a model to understand the incidence of presidential and parliamentary institutions. Our analysis is predicated on two ideas: first, that minorities are relatively powerful in a parliamentary system compared to a presidential system, and second, that presidents have more power with respect to their own coalition than prime ministers do. These assumptions imply that while presidentialism has separation of powers, it does not necessarily have more checks and balances than parliamentarism. We show that presidentialism implies greater rent extraction and lower provision of public goods than parliamentarism. Moreover, political leaders prefer presidentialism and they may be supported by their own coalition if they fear losing agenda setting power to another group. We argue that the model is consistent with a great deal of qualitative information about presidentialism in Africa and Latin America. |
| JEL: | H1 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14603&r=pol |
| By: | Eric Weese |
| Abstract: | Political coalition formation games can describe the formation and dissolution of nations, as well as the creation of coalition governments, the establishment of political parties, and other similar phenomena. These games have been studied from a theoretical perspective, but the models have not been used extensively in empirical work.This paper presents a method of estimating political coalition formation models with many-player coalitions, and then applies this method to the recent heisei municipal amalgamations in Japan to estimate structural coefficients that describe the behaviour of municipalities. The method enables counterfactual analysis, which in the Japanese case shows that the national government could increase welfare via a counter-intuitive policy involving transfers to richer municipalities conditional on their participation in a merger. |
| Keywords: | Coalition Formation, Municipal Mergers, Japan |
| JEL: | C71 H77 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd08-17&r=pol |
| By: | Ashoka Mody; Diego Saravia |
| Abstract: | Has the spread of democracy and political participation impeded the need for speed required by financial markets and the elevated threat of contagion across borders? We examine the time span between the onset of a financial crisis and the agreement on an IMF-supported adjustment program. This span appears to have decreased over time. More precisely, we find that the time from a crisis to the approval of a program has been smaller the more serious the crisis. Importantly, this responsiveness to a widening range of financial vulnerabilities has increased with growing financial integration. Democracies, particularly those with checks and balances, have been sensitive to time pressures. |
| Keywords: | Financial crisis , Fund arrangements , Political economy , Capital markets , Economic integration , Relationships with Fund , Globalization , |
| Date: | 2008–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:08/276&r=pol |
| By: | Hun-Chang Lee (Korea University) |
| Abstract: | Nowadays, the terms economics and political economy are translated in Korea, Japan, and China as Kyeongjaehak(which originally meant statecraft for the people's welfare) and Jeongchikyeongjaehak, respectively. However, the translation of Kyeongjaehak, in fact, originated in the very concept of political economy. The etymology of the translated terms for political economy in India and China actually accords with the original concept of political economy prior to the establishment of modern economics, while that in the Arabic region is congenial to the definition of economy. These terms were born in the heyday of ancient thoughts, and have been reborn in today's definitions with the establishment of modern economics. Originating in the Greek oikonomia, literally "management of household," the adjective political was added to describe the management of polis or state. With the advent of Classical economics, the term political economy became a social science to study of the laws of production and distribution and of the nature of wealth. Later, Neoclassical economists, who sought to establish the study of the economy upon mathematical methodology, and who aimed to analyze behaviors of households and firms regardless of politics, replaced the term 'political economy' with 'economics' without the adjective political. The etymology of Kyeongjaehak, which first appeared as a translated term in an English-Japanese dictionary published in 1862, shares some aspects with the Classical concept of political economy, but is irrelevant to the Neoclassical definition of economics. This term ultimately triumphed over other translations, such as Ejaehak(which originally meant the study of governing wealth), which captured the Classical and Neoclassical concepts more appropriately. In China, where there were more competing translated terms than there were in Japan, the term Kyeongjaehak was generally considered as an inappropriate translation, but was, nonetheless, adopted in the end. As for Korea, strongly influenced by modern sciences from Japan since the 1880s, there was little resistance against the adoption of the Japanese translation. The etymology of political economy, as a subject of translation, along with the innate nature of the early Classical economics' moral philosophy, helped the term Kyeongjaehak to prevail. As people better understood economics, both the Japanese and the Chinese thought that the meaning of Kyeongjaehak was too broad to capture the concept of political economy or economics, while the alternative term, Ejaehak, by contrast, was too confining. At that time, the three, backward East-Asian countries viewed the utility of economic science as serving the development of national economy and this goal was best represented by the Chinese characters Kyeongjaehak, which was the key determinant for its final victory. In sum, the selection of Kyeongjaehak as the translated term for economic science was affected by the evolution of the modern science at the beginning, while, at the finishing point, it reflected the demands of the times. Since the late twentieth century, mainstream economics has extended its fields of study to embrace history, institutions, politics, culture, etc. In that sense, the broad term Kyeongjaehak seems more appropriate for the translation of economics rather than Ejaehak, which is better suited as a term for the confined research-area of Neoclassical economics before the middle twentieth century. |
| Keywords: | Economics, Political economy, Oikonomikos, Translation |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:iek:wpaper:0807&r=pol |