European Journal of Political Economy最新文献

We examine whether firms’ business confidence – defined as their perceptions of risk and sentiment associated with the COVID-19 pandemic – is affected by ex ante health system capacity and ex post government responses. Using firm-level data from 53 countries, we find that ex ante proactive measures, such as healthcare spending and the availability of medical staff, favorably impact firms’ confidence. This effect is, however, moderated by the COVID-19 case load. We also find that the ex post reactive measures, such as health and containment actions and the overall quality of the government response, also bolster business confidence. These effects on confidence vary by firm size and the level of development of the economy, but are largely impervious to prior epidemic experience.

In this paper, we investigate whether voters hold local politicians accountable for the performance of local schools. We examine this effect for the 2013 and 2017 Danish local elections using register data and polling station-level voting records. We find robust evidence of retrospective voting from pooled and fixed effects estimations. Exploiting the micro-level character of our data, we present evidence that higher-income citizens are more sensitive to changes in school performance, while other demographic and political characteristics do not appear to have mattered.

Since the global financial crisis of 2008, the level of perceived corruption in Italy has risen markedly, diverging significantly from the perceived corruption of other high-income countries and from the corruption as experienced. We propose that newspapers, in order to maximize their profits, have given directed emphasis to episodes of political corruption, which has contributed to the increase in perceived corruption. The consequence has been loss of parliament's credibility and a deterioration in the quality of the Italian political class.

This paper explores a behavioural mechanism through which income inequality may be associated with population health. We consider a model with heterogeneous agents in which agents' preferences are characterized by income inequality aversion. Our analysis shows that spending on health-producing goods is inversely related to the agents’ degree of inequality aversion. A Veblenesque mechanism drives this relation: inequality averse poor agents wish to enjoy consumption levels closer to the average consumption levels in the economy but can only do so by reducing their expenditures on health. This leads to adverse outcomes for individuals and adverse political economy implications for health. In the political economy context, agents characterized by high inequality aversion vote for lower levels of government health spending. To specifically test this mechanism, we construct empirical measures of inequality aversion. Then, using these measures for a panel of 147 countries spanning 2008–2019, we find a significant negative impact of inequality aversion on allocations of public spending for healthcare. These results remain robust to different model specifications.

This paper shows that adopting fiscal rules (FRs) decreases the use of capital controls and increases cross-border financial integration. This result is robust to alternative measures of fiscal rules, capital controls, and international financial integration — it is also robust to alternative econometric approaches. It also shows that the adoption of fiscal rules increases financial integration. This paper innovatively employs a formal instrumental variables (IV) approach to tackle the endogeneity of the decision to adopt fiscal rules. The adoption of FRs is instrumented using the age dependency ratio (ADR). This strategy is particularly effective because adopting FRs is more likely when the ADR is relatively low, a finding well established in the empirical literature. Governments impose capital controls to channel domestic savings into the public sector, finance their excessive fiscal deficits, and reduce their borrowing costs. However, the uncertainty over the government's future fiscal policies may lead to capital flight. FRs ‘tie the hands’ of governments and induce them to commit themselves to fiscal discipline. Moreover, FRs can also reduce the government's borrowing costs. These effects of FRs render capital controls less necessary and lead policymakers to lift capital controls, resulting in higher cross-border financial integration.

Does inequality undermine support for democracy? While previous research has either focused on macro-level associations or alleged a uniform relationship between inequality and individual democratic support across countries, this paper documents the importance of the current regime type and of the source of inequality for such a linkage. Exploiting differential transition to democracy after the collapse of the Soviet Union allows to investigate the association of democratic support across regimes with differing levels of democracy. Inequality is found to erode democratic support in democracies and to foster democratic beliefs in non-democracies. In other words, inequality always subverts individual-level support for the current regime type. Further, evidence is provided for the relevance of disentangling the sources of economic inequality in line with fairness concerns: While unfair inequality (generated by factors beyond an individual’s control) and total inequality both are significantly correlated to democratic support, unfair inequality appears to be the relevant inequality component driving this association.

This paper examines whether major output collapses are more likely under autocracy. Using data on 123 developing countries over 1971–2016, we model the joint evolution of output growth and political institutions as a finite state Markov chain with a two-dimensional state space. We study how countries move between states. We find that growth is more likely to be sustained under democracy than under autocracy; output collapses are more likely to deepen under autocracy; and stagnation under autocracy can give way to outright collapse. Democratic countries appear to be more resilient.

In the wake of a massive thrust on designing policies to tackle climate change, we study the role of climate policy uncertainty in impacting the presidential approval ratings of the United States (US). We control for other policy related uncertainties and geopolitical risks, over and above macroeconomic and financial predictors used in earlier literature on drivers of approval ratings of the US president. Because we study as many as 19 determinants, and nonlinearity is a well-established observation in this area of research, we utilize random forests, a machine-learning approach, to derive our results over the monthly period of 1987:04 to 2023:12. We find that, though the association of the presidential approval ratings with climate policy uncertainty is moderately negative and nonlinear, this type of uncertainty is in fact relatively more important than other measures of policy-related uncertainties, as well as many of the widely-used macroeconomic and financial indicators associated with presidential approval. More importantly, we also show that the importance of climate policy uncertainty for the approval ratings of the US president has grown in recent years.

The demand for drug legalization is remarkably heterogeneous across countries and over time. A theory is presented to show that ruling politicians can influence this demand by choosing the level of enforcement of drug laws which will influence their exposure to drug use and their views on legalization. If legalization has, overall, expected social benefits, politicians opposed to it will adopt a higher level of law enforcement than politicians in favor. In this case, the level of law enforcement is excessive with respect to the optimal level. If instead, legalizing the drug has overall expected social costs, then the opposite will be the case. The examples of the Netherlands and the US are used to test the model.

The rapid aging of the population has become increasingly challenging for public healthcare systems. To ensure sustainability, governments must persuade their citizens to accept a larger burden, which is a difficult task. This study explored whether informing individuals of self-benefits from the healthcare system could be a solution. We first constructed a two-period overlapping generations model and hypothesized that doing so could facilitate political support for larger healthcare insurance contributions; however, this effect is reduced when people are concerned about fiscal sustainability due to a declining fertility rate. To test these hypotheses, we conducted an online survey experiment in Japan, in which the treatment group was informed of the benefits from the public healthcare system. We found that the treatment had no effect on average but augmented support for a larger burden among respondents who were unaware of fiscal unsustainability. Furthermore, this positive effect on optimistic respondents reduced once they were informed of the fiscal risks. Moreover, we analyzed the heterogeneity of the treatment effects depending on time and risk preferences.