European Journal of Political Economy最新文献

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.

People's trust in state and political institutions is a key foundation of a well-functioning economy. The question of whether direct elections affect trust remains open, especially in developing countries, due to a scarcity of studies with robust identification strategies. We estimate the impact of direct elections on people's trust in state and political institutions, using a major political reform in Indonesia as the source of exogenous variation. Pre-2005, regents, mayors, and governors were elected by the local legislative assembly. Starting in 2005, they must compete in an open election where voters directly choose their preferred leader. The historically and institutionally driven staggered implementation of these local direct elections enables us to identify the causal impact of the reform. We find that direct elections increase trust in all state and political institutions, except for the police and political parties. We find that trust only increased in districts where the elections were held with no or low hostility, implying that trust is strongly influenced by political situations during direct elections. We find that elections did not really improve well-being or satisfaction, implying that the absence of election hostility is a stronger explanation for the higher trust.

We create a database of officials who have been found guilty of corruption in China in the period 2012-21 with their personal characteristics and the amount of embezzled funds. We use it to investigate the correlates of corruption, estimate the effects of corruption on inequality, and find the expected increase in officials' income due to corruption and the gain in income distribution ranking. We find that the amount of corruption is positively associated with education, administrative (hierarchical) level of the official, and years of membership in the Communist Party. The sample of corrupt officials belongs to the upper income ranges of Chinese income distribution even without corruption. But corruption allows them to accede to an even higher position in income distribution. While only one-half of the corrupt officials would be in the top 5 percent of China's urban distribution without illegal incomes, practically all are in the top 5 percent when corrupt income is included.

This paper investigates the effects of global geopolitical risk on stock prices of 29 economies by using the local projections method for the monthly period between 1985M1-2023M9. The results show that a positive unit shock of global geopolitical risk (normalized to one standard deviation) reduces stock prices (normalized to one standard deviation) in a statistically significant way by 0.80 in Latvia, 0.71 in China, 0.62 in the Euro Area, 0.50 in Sweden, 0.42 in the United Kingdom, 0.39 in the United States, 0.38 in Switzerland, 0.34 in Israel, 0.28 in Canada, and 0.21 in Denmark in a year following the shock, whereas it increases those only in Iceland by 0.28 that can be used to hedge against any geopolitical risk. Subsample analyses further suggest that the negative effects of the same shock exist in several economies (including the United States, China and Euro Area) during the first half of the sample period that coincides with the geopolitical events that the United States is involved with, whereas they only exist in Russia, Poland, Euro Area and the United Kingdom for the second half of the sample period, suggesting that the Russo–Ukrainian War has mostly affected the stock prices in these nearby economies. It is implied that the geographical location of geopolitical events as well as the countries involved are important indicators to understand the effects of any global geopolitical risk on stock prices.

Firms and policy makers are increasingly looking at friend-shoring to make supply chains less vulnerable to geopolitical tensions. We test whether these considerations are shaping FDI flows, using investment-level data on over 300,000 instances of greenfield FDI between 2003 and 2022. Estimates from a gravity model, which controls for standard push and pull factors, show an economically significant role for geopolitical alignment in driving the geographical footprint of bilateral investments. This result is robust to the inclusion of standard bilateral drivers of FDI – such as geographic distance and trade flows – and the strength of the effect has increased since 2018, with the resurgence of trade tensions between the U.S. and China. Moreover, our results are not limited to greenfield FDI, but hold also for M&As.