European Journal of Political Economy最新文献

In times of crises, democracies face the challenge of balancing effective interventions with civil liberties. This study examines German states’ responses during the early stages of the COVID-19 pandemic, focusing on the trade-off between civil liberties and public health. Using state-level variation in mobility restrictions, we employ a difference-in-differences design to show that stay-at-home orders notably increased satisfaction with democracy and shifted political support towards centrist parties. Stay-at-home orders increased satisfaction with democracy most among individuals who had been exposed to the authoritarian regime of the German Democratic Republic, possibly because they have gotten used to more restrictive state interventions.

We provide new insights into the effectiveness of central bank communication in the euro area relying on a novel methodology. The time-varying text based ideal point model (TV-TBIP) is used focusing on two crucial topics communicated by central bankers, namely price stability and financial stability. The methodology permits identification of the ideological position of the speaker. We find that the ECB transitions between a high ideal point state reminiscent of interventionist monetary policy and their effects on financial markets and a low ideal point state with emphasis on risks to fragmentation from monetary policy and financial stability policies. The individual euro area central banks tend to mirror the ECB’s position which suggests that some specialization/coordination of responsibilities from the communications activities of euro area national central banks takes place. National central banks’ positions change gradually and usually during crisis periods. In contrast, the ECB’s ideological position is very stable. We also conduct several econometric tests that point to national inflation rates influencing ideological positions. Additionally, we find that professional forecasts are responsive to the position taken of central bankers in their speeches.

Although there is no consensus on the relationship between natural resource abundance and economic growth, much of the economic literature suggests that natural resource abundance negatively affects economic growth in developing countries, leading to the resource curse theory. This situation led the international community to create the Extractive Industries Transparency Initiative (EITI) in 2003 to promote the effective contribution of natural resources to economic growth through a process involving governments, extractive industries, and civil society. Considering 99 developing countries from 1995 to 2019 and applying recent heterogeneity-robust difference-in-differences (DID) estimators, we find a positive and statistically significant relationship between EITI implementation and economic growth. Several robustness checks support this result. Most interestingly, the analysis of EITI’s dynamic effects reveals that these effects occur only in the short and medium terms. In addition, we tested several potential transmission channels and identified the increase in foreign direct investment and the rise in resource revenue as the main transmission channels. Moreover, we postulate and investigate four possible explanations behind the EITI’s mixed results on long-term growth: the lack of evidence of a negative relationship between natural resource abundance and long-term economic growth over the study period, a possible increasing reliance on non-resource taxes, a possible signaling effect targeted by member countries, and the lack of effect of EITI implementation on reducing corruption. Finally, the document provides economic policy recommendations for better governance in the management of natural resources in order to increase their contribution to development financing. Furthermore, improving governance in managing critical minerals is vital to avoid a “new curse of critical minerals”.

Has globalization affected the use of fiscal policy as a macroeconomic stabilization tool in response to financial crises? We study this question in an empirical model using different dimensions of globalization – political, social, and economic – and de facto and de jure measures of the different dimensions. By estimating Jordà (2005)-type local projections, we first document that higher political, social and economic globalization matter for the policy response to financial crises, producing more contractionary or austerity policies in terms of the high-employment surplus after distress. High initial debt-to-GDP ratios exacerbate to some extent the effects of globalization, producing additional fiscal austerity after financial distress. Second, we find that countries’ degree of policies and conditions that enable or restrict international flows and activities – hence policies “on paper” – matter most for the effects of globalization on the dynamics of fiscal policy after a financial distress, compared to the actual degree of such flows, that is, policies “in practice”. In total, using of fiscal policy as a macro stabilization tool in an environment of increased globalization appears to be restricted. Accommodation and reinforcement of debt externalities, fiscal spillovers and contagion ensuing from increased globalization may have contributed to policymakers’ concerns about debt sustainability and sovereign risk, thus influencing the fiscal policy response.

The literature connecting economic freedom indexes to income levels and growth generally points in the direction of a positive association. In this paper, we argue that this finding is a conservative one as the data is biased against finding any effects. The bias emerges as a result of the tendency of dictatorial regimes to overstate their GDP level. Dictatorships also tend to have lower scores of economic freedom. This downwardly biases any estimations of the relation between income and economic freedom. In this paper, we use recent corrections to GDP numbers – based on nighttime light intensity – to estimate the bias. We find that the true effects of economic freedom on income levels are between 1.1 and 1.62 times greater than commonly estimated. For economic growth, the bias is far smaller. Finally, we find suggestive evidence that the relationship between changes in economic freedom and economic growth is being underestimated as a result of the lies of dictators regarding GDP.

Are anti-corruption agencies able to secure public trust, promote public integrity and fight political corruption in the eyes of the general public? The paper investigates this question by focusing on France, which became a leader in the fight against corruption after the launch in 2013 of the High Authority for the Transparency in Public Life (HATVP). We run a survey experiment among 3000 citizens and 33 experts to collect their prior beliefs about political corruption, and then evaluate the impact of granting information about the track record of the national agency on citizens' perceptions of its effectiveness and legitimacy. The paper provides four main results. First, as expected, information provision has meaningful and positive impacts on citizens’ perceptions of the HATVP, political transparency, and representative democracy. Second, while most beneficial impacts are broad-based, treatment effects are as large or even larger among the most poorly informed and distrustful citizens. Third, the experiment points toward the existence of a modest “integrity paradox”, i.e., an increase in the salience or perceived severity of corruption when citizens are better informed about the anti-corruption agency. Fourth, information provision reduces the divergence of opinions between the average citizen and experts about the effectiveness of the HATVP and the dynamics of political integrity.

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.