European Journal of Political Economy最新文献

This paper examines the link between political instability and economic growth in 34 advanced economies from 1996 to 2020. First, we use a panel VAR estimated via the System GMM to explore the endogenous relationship between economic growth and political instability and identify transmission channels. Second, we employ an instrumental variable approach, exploiting temperature variation and spillover effects of political instability to establish causality. The results of both approaches indicate that a one-standard deviation shock of political instability significantly and substantially reduces economic output. We find no evidence, however, that economic growth affects political instability.

This study investigates a critical source of political uncertainty for foreign investors in a centralised political system: leadership turnover within local governments. Our stylised model suggests that risk-averse foreign investors, faced with this uncertainty, tend to offer a larger revenue share to their local partners in international joint ventures (IJVs). This incentivises local officials to provide the necessary authorisations and public inputs for IJVs. Using a unique Chinese dataset that links city-level leadership changes with firm-level incentive structures, our empirical analysis provides robust evidence supporting this framework.

Should Europe Really Worry about Geopolitical Risks? This study investigates the impact of geopolitical tensions and risks on the economies of the Euro area. In particular, we assess the reaction of key sectors (financial sector: stock market, exchange rate, inflation; energy sector: oil and gas; real sector: economic growth rate) with regard to geopolitical shocks over the period September 2003–March 2024. We measure the reaction of European economies to global geopolitical risks, as well as risks related to geopolitical events and threats. To this end, we adopted the ARDL model and bound tests to estimate the effects of geopolitical risks in the short and long terms. Our findings present two interesting results. First, geopolitical risks can reduce economic growth and provoke depreciation of the euro. Second, geopolitical tensions can increase inflation and put pressure on Brent oil and gas prices in Europe. The European stock market seems more resilient to geopolitical shocks, however. Finally, adverse geopolitical events are also associated with greater economic and political uncertainty in Europe.

Despite its salience in modern politics, scandal has only recently been treated as a subject of inquiry in political economy. Most of the literature has focused on scandal’s effects on electoral outcomes, while a theoretical literature on endogenous scandal has offered predictions and hypotheses that remain largely untested. This paper uses an original dataset of U.S. Congressional scandals to test some of those predictions. Special place is given to the role of opposition research by political opponents and the strategic timing of scandal release. Despite persuasive theoretical arguments in the literature as to factors that might affect scandal, we find the only meaningfully significant predictor of scandal incidence to be election timing.

This paper investigates the role of fiscal rules in managing public debt, particularly focusing on their efficacy during different phases of economic cycles. Analyzing Balance, Expenditure, and Debt Fiscal Rules, the study finds that their impact on debt reduction is significantly influenced by the quality of the fiscal framework and the economic cycle phase. Moreover, factors like legal basis, procedural framework, and political stability are identified as key to ensuring compliance with fiscal objectives. Our results suggest that fiscal rules are most effective in reducing debt during positive economic cycles, with the design and institutional support playing a crucial role. This has important policy implications, particularly in the context of the debt increase after the Covid-19 pandemic.

The Federal Reserve has started paying closer attention to matters of race over the last decade. The central bank has increasingly emphasized the distinct economic challenges facing racial minorities, and its leadership has become more racially diverse. This paper applies theories of descriptive and substantive representation to understand how these shifts are likely to impact the popular legitimacy of the Federal Reserve. We hypothesize that greater Black descriptive and substantive representation improves Black Americans' confidence in the Federal Reserve. We also anticipate that political ideology moderates how white Americans respond to the increases in Black representation within the Federal Reserve, with white conservatives responding less favorably to these changes than more left-leaning whites. Analysis of data from two original survey experiments with separate samples of 3000 Americans, split evenly between Black and white respondents, supports our expectations. Information about substantive and descriptive representation at the Fed has a strong impact on Black Americans' perceptions of the institution. We also find that these changes at the Fed boost white liberals' views of the Fed but have little impact on white conservatives’ attitudes about the central bank.

We investigate whether the provision of information about the structure of public spending influences the public’s preferences in this regard. Using experimental data from a survey of 1800 Polish citizens, we uncover large misperceptions about the allocation of public spending. Respondents consistently underestimate the share of spending allocated to pensions, while overestimating the share allocated to environmental protection and public administration. However, when informed about the real structure of public spending, citizens express substantially different preferences for spending cuts or increases in some areas. The differences are particularly pronounced in those categories where beliefs about the size of spending are most distorted, with one exception — the treatment has minimal effect on the strong opposition to spending on public administration. In addition, we show that the provision of information improves the initially low assessment of government efficiency.

Electoral quotas for disadvantaged groups aim to promote social justice by ensuring that all groups, including those who are otherwise excluded, participate in the government’s policy-making process. In India, electoral quotas have been in existence since the first election in 1951. An important research question is to evaluate the effect of electoral quotas for disadvantaged groups on the developmental outcomes of these groups. In this paper, we study whether electoral quotas for erstwhile untouchable castes i.e. Scheduled Castes (SCs) in India, lead to better developmental outcomes for Scheduled Castes. We consider four important indicators of welfare: primary schooling, infant mortality, access to subsidized food grain and employment under a government workfare scheme. We find that SCs in districts with a higher proportion of SC-reserved seats fare worse in terms of education, child health, and access to subsidized food grains. However, the probability of getting employed in a large government workfare scheme is higher for SCs from districts with a higher proportion of SC-reserved seats. Our results suggest that politicians prioritize providing targetable goods such as workfare while under-providing broad-based public goods such as education and healthcare or public goods like subsidized food grains, which offer higher opportunities for rent extraction.

We present a formal model in which elite communication and voters’ beliefs during a political scandal emerge as a communication equilibrium, determined by the severity of the accusations and the degree of media scrutiny. The prediction of our model is that incumbents’ use of denials can garner support even when they face the possibility of evidence showing their guilt. In contrast, public apologies increase approval – compared to denial – only when accusations are not very serious and are likely to be proved. Results from a large survey experiment corroborate these predictions. In order to explore how changes in the information environment shapes the communication equilibrium, we estimate the structural parameters of our model and conduct counterfactual simulations. We find that increasing media scrutiny leads to asymmetric effects on incumbent communication with politicians who are the best at covering up evidence actually benefiting from increased scrutiny.

We examine the effect of broadband Internet penetration on attitudes toward immi-grants by combining survey data from Spain with information on the characteristics of the telephone infrastructure. To address endogeneity concerns, we use landlines penetration in 1996 as an instrument for broadband diffusion, and use data from both the pre- and post-Internet period to estimate a difference-in-difference instrumental variable model. We document a positive effect of broadband Internet on attitudes toward immigrants. Looking at mechanisms, broadband Internet is associated with better knowledge about immigration, reduced concerns about the labor market effects of immigration and lower support for Spain's right-wing party.