European Journal of Political Economy最新文献

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.

Numerous studies have documented that misperceptions about society, e.g. related to inequality, are widespread among voters. Simultaneously, a separate body of literature demonstrates increasing political polarization. Against this background, it is intuitively appealing to hypothesize that information provision can be useful not only to correct misperceptions, but also to create a common ground that can bridge divisiveness. In a general population survey, conducted in the United States, we show that beliefs in the power of information to reduce polarization are indeed widespread. To investigate the empirical relationship between information provision and polarization, we conduct a systematic literature review. We focus on papers that study the effect of information treatments on redistributive policy preferences, exploiting the fact that they often investigate heterogeneities in the reaction to information treatment. Our review shows that while it is certainly possible for information to decrease polarization, the effect is frequently the opposite. The reason is that different groups react differently to truthful and accurate information, in ways that often reinforce existing preference.

We investigate the event-based geopolitical shocks from the Russian invasion of Ukraine on agricultural and energy commodities using daily event-based structural vector autoregression (SVAR). We find that the geopolitical shock affects the markets of wheat (2%), corn (1%), and European natural gas (7.5%). However, substantial heterogeneity is observed among the agricultural and energy markets. Geopolitical risk stemming from the Russia-Ukraine conflict affects the European natural gas market more strongly than the US and Asian markets. The regional segment of natural gas markets could explain this. Finally, our analysis explores how geopolitical news affects the dynamics of stock, currency, and bond markets.

This paper analyzes the effect of US economic sanctions on sovereign debt default across 118 developing countries from 1980 to 2018. We use entropy balancing method, and provide robust evidence that US sanctions increase sovereign debt default in the targeted states. This finding withstands several robustness tests, including alternative specifications and databases, and alternative estimation methods. The results also reveal some heterogeneity depending on the type of sanctions (for example, trade versus financial sanctions), on whether they are imposed unilaterally or multilaterally, on the severity of the sanctions, on the geographical distance from the United States, the time since sanctions were imposed, and some structural characteristics. In addition, we find that the development of cryptocurrencies reduces the effect of sanctions, and that failed sanctions have a greater effect on default. The compositon effect based on the type of debt in default shows that the effect of US sanctions is only observed on the default on external debt and not on that of internal debt. Next, we identify three main channels through which sanctions trigger sovereign risk; namely economic growth contraction, the occurrence of banking crisis and reduced access to international financial market. Finally, we explore the effect of other sanctions, notably those of the European Union and the United Nations, and find that these sanctions also raise the probability of sovereign debt default.

In a well-functioning democracy, citizens can influence public policy through voting. By voting prospectively, voters may aim to select politicians that make policies in line with their preferences, and, by voting retrospectively, they may reward or punish politicians for their performance. To what extent voters actually influence policy is unclear, especially in local government, where many impediments to policy responsiveness may exist. Moreover, voters may realize that their influence on public policy is negligible and vote expressively instead of instrumentally. We investigate a key area in public policy, tax policy, using panel data on municipalities in the Netherlands in the period 1998–2021. We find that changes in the political color of the municipal council on average do not lead to changes in tax levels or tax distribution. However, incumbents that lower taxes fare better at the polls than incumbents that moderately increase taxes. Interestingly, strong tax increases do not lead to more severe electoral punishment, and punishment does not seem to differ between left-wing and right-wing incumbents. Our results suggest that expressive voting plays an important role. People may vote left-wing and express their identity as charitable persons, and then punish incumbents who actually raise taxes.