Does international trade competition influence candidates and voters? The case of Japanese Lower House elections

In this study, we explore the effects of regional exposure to manufacturing imports and exports on candidates and voters in national elections through panel data analyses, dealing with the possible endogeneity issues. We show that candidates tailor their stances toward trade policy in response to changes in local trade exposure. Increased manufacturing exports drive candidates to support relatively open trade policies; however, increased manufacturing imports do not influence candidates’ stances on trade policy. We also find that changes in local trade exposure influence citizens’ voting behavior. In districts with increased exports of manufacturing products, voters tend to cast ballots for parties that pledge to promote a free trade agreement as opposed to those that adopt a cautious attitude toward it. In districts that experience increased imports of manufacturing products, voters tend to support parties that are clearly opposed to establishing it. The economic issues related to international trade appear to be important to both candidates and voters in elections.     

Presidential popularity and reputation

Summary This paper reports on the results of an empirical study of relationships between the popularity of US presidents and economic variables. Traditionally, these relationships are based on the hypothesis that voters hold the incumbent President responsible for the economic situation. We derive an alternative specification of popularity, based on the hypothesis that political parties perform better on different issues. Empirical evidence turns out to be strongly in favour of our hypothesis. Our findings have important implications for studies on government behaviour in which it is assumed that one of the objectives of administrations is to maximise votes.I am indebted to J.C. Siebrand, A.S. Brandsma, G.E. Hebbink, N. van der Windt and an anonymous referee for many useful suggestions.     

The Shocking Origins of Political Transitions: Evidence from Earthquakes

Do earthquakes trigger political transitions? Using a rich panel dataset of 160 countries observed over 1950–2007, we find that earthquake shocks, measured in terms of the effect of ground‐motion amplitude on death toll, have two contradicting effects on political change. On the one hand, earthquakes drive transitions into democracy due to an affective shock, which we interpret to be the reaction of citizens by which they hold the incumbent government responsible for earthquake damages. On the other hand, earthquakes indirectly hasten transitions into a less democratic regime because they increase the income level contemporaneously, possibly due to short‐term emergency response and recovery expenditures, and thus, raising the opportunity cost of contesting the incumbent government. Overall, we show that, while not leading to a full‐fledged regime transition, earthquake shocks open a new democratic window of opportunity, but this window is narrowed by improved economic conditions.     

Party Politics,Governors, and Economic Policy

In this article, we evaluate the role of elections in governors' state tax policy making. Does it matter for state taxes whether the governor is a Democrat or Republican and whether she is eligible for re‐election or faces a binding term limit? Using a Regression Discontinuity Design and a panel of U.S. states, we find that the manner in which governors of different parties implement different tax policies turns crucially on the incumbent's eligibility for re‐election. Re‐electable Democratic governors increase income taxes relative to similarly situated Republicans, yielding divergence between party policy positions. However, governors facing a binding term limit exhibit the reverse policy difference, resulting in a movement of policy back together.     

TAXING TIMES: STATE-LED INCOME REDISTRIBUTION IN NEW ZEALAND'S 'GOLDEN AGE'

Welfarism has been posited as central to how the state fostered the integration of the working class into the post-war economic order. However, analysis of national accounts data from 1949 to 1975 shows that New Zealand's welfare state redistributed income primarily from one fraction of the working class to another. That is, wage-earners financed their own collective consumption. This finding suggests that system integration effects of state welfare expenditure are predicated less on economic gains that accrue to labour, than they are on state-sponsored welfare discourse. Future research should therefore concentrate on both economic and discursive aspects of the welfare state.     

Race,class, and politics in the black community of Boston

Conclusion We found that there are indeed some slight differences in the electoral behavior of black voters when we separate them into high and low socio-economic areal categories based on the level of median income. These slight differences include turnout rates for primary and general elections and voter registration rates. The higher the socioeconomic status of the black electorate in Boston, the higher the turnout and registration rates for that area tended to be; however, this relationship was not found to be consistent among all the areas selected for study. Despite these differences in electoral behavior or “practices,” our areal model does not suggest any significant political schisms based on the sicioeconomic indicators used. Black voters tended to vote the same way on a number of city and state ballot questions, support the same candidates at both the city and state level, and vote the liberal preference on both issues and candidates regardless of socioeconomic background. In addition, there is some evidence that the higher a black voter is on the socioeconomic scale, the greater his or her tendency will be to vote the liberal position on various issues and candidates. Our model also suggests that black voters will tend to support black candidates regardless of some socioeconomic factors. If this model can be used as an indication of class differences in the black community, then our data show that socioeconomic criteria are not as salient as race in determining the political behavior and preferences of black voters.     

Optimal Stabilization Policy Under Governmental Risk Aversion

Governmental stabilization policies take account of the underlying risk aversion of its voters. A utility function for the government is defined, one which includes variances of national income changes with respect to its policy instruments—here the budget variable, the bond rate of interest, and the currency-exchange rate. The consequence of this for the optimal set of policies is a target level of national income less than what a risk-neutral government aims at. This applies to an open economy when this is a key-currency country, as it need attend to balance-of-payments effects only insofar as they affect national income. The non-key-currency country, by contrast, must take account directly of balance-of-payments effects and their variance, so it reaches a lower level of utility than the key-currency country.     

The trend of the Gini coefficient of China (1978–2010)

ABSTRACT

This study proposes a new approach to analyse the effects of an overlap term on the calculation of the overall Gini coefficient and estimates China’s Gini ratios since the adoption of the economic reform and open-door policies. A decomposition of the Chinese Gini coefficient for 1978–2010 reveals that the key factor contributing to income inequalities is the income disparity between rural and urban inhabitants. We further investigate the features of this income inequality between rural and urban areas and employ statistical approaches to evaluate the effects of urbanisation and rural-to-urban average income on nationwide income inequality. The results show that accelerating the pace of urbanisation is mainly responsible for decreasing China’s income disparity. Drawing on these results, we conclude with suggestions for related policies.     

Flight to Quality in International Markets: Investors’ Demand for Financial Reporting Quality during Political Uncertainty Events

We examine whether international equity mutual fund managers shift their portfolios toward stocks with higher financial reporting quality (FRQ) during periods of high political uncertainty. Our study is motivated by two primary factors. First, prior research shows evidence of fund managers’ “flight to quality” (e.g., to less risky securities) during periods of uncertainty. Second, recent theoretical research concludes that stocks with higher FRQ are assessed as less sensitive to systematic risk (such as political uncertainty). We employ national elections as exogenous increases in systematic risk in the local markets and accordingly use an international sample of mutual funds that focus on local markets. We find that mutual fund managers shift their equity holdings to stocks with higher FRQ during election periods when political uncertainty is higher. Such a flight‐to‐quality effect is less pronounced for elections with larger expected electoral margins in the pre‐election period (i.e., when the incumbent is more likely to win the election) and for countries with higher transactions costs. In contrast, the effect is more pronounced when governments have greater involvement in the local economy. Our inferences are robust to alternative proxies for political uncertainty and FRQ and to numerous other sensitivity analyses.     

Preferential policies and income inequality: Evidence from Special Economic Zones and Open Cities in China

This paper examines whether cities with preferential policies have higher inequality in household disposable income per capita than cities without preferential policies in urban China. “Preferential policies” refers to the autonomy and deregulation given to Special Economic Zones (SEZs) and Open Cities, allowing them to experiment with market policies and reforms, as the country moves from a state-controlled economy towards a market-oriented economy. While the effect of these policies on economic growth is extensively documented, their relationship with income inequality remains undetermined. Subgroup decompositions of income inequality, using the China Household Income Project's urban datasets of over 6000 households and 20,000 individuals from of up to 70 cities from 12 provinces, were used to identify income inequality gaps between cities with and without preferential policies. The results reveal that while income inequality increased in urban China from 1988 to 2007, the change was lower for cities awarded preferential policies across regions. Furthermore, the decompositions by region indicate that cities receiving preferential policy treatment had higher income growth but a lesser increase in income inequality than cities without preferential policies in each region. Finally, cities receiving preferential policies were able to increase the share of income of the poorest 40% of households while reducing the share of the richest 10%.     

Indonesian politics in 2012: coalitions,accountability and the future of democracy

Indonesia is a successful but flawed democracy: while the electoral process has worked well, the quality of democratic governance is less encouraging. Missing from the equation between elections and democracy is political accountability. Parties’ obsession with coalition building as a route to political power has made it difficult for voters to attribute success or failure to elected officials. Coalition government allows politicians to send contradictory messages, and in 2012 religious minorities – which are neither banned nor protected – have paid a heavy price for the lack of accountability and leadership. In Jakarta an outsider, Joko Widodo, won the gubernatorial election despite facing an incumbent backed by a broad coalition. His victory illustrates that coalition building does not guarantee success, and that the electorate is mature enough not to be swayed by appeals to religious and ethnic sentiment. This gives heart to those hoping to strengthen democracy and democratic values in Indonesia.     

Lights out? COVID-19 containment policies and economic activity

This paper estimates how strongly COVID-19 containment policies have impacted aggregate economic activity. We use a difference-in-differences methodology to estimate how containment zones of different severity across India impacted district-level nighttime light intensity, as well as household income and consumption. From May to July 2020, nighttime light intensity was 9.1 % lower in districts with the most severe restrictions compared with districts with the least severe restrictions, which could imply between 5.8 % and 6.6 % lower GDP. Nighttime light intensity was only 1.6 % lower in districts with intermediate restrictions. The differences were largest in May during the graded lockdown, and tapered in June and July. Lower house-hold income and consumption corresponding to zone-wise restrictions corroborate these results. Stricter containment measures had larger impacts in districts with greater population density, older residents, and more services employment. The large magnitudes of the findings suggest that governments should carefully consider the economic costs of country-wide pandemic containment policies while weighing the trade-offs against public health benefits. Keywords: Containment policies, COVID-19, Nighttime lights, India     

Economic growth under political accountability

We examine the impact of political and criminal accountability on economic growth. Governments seek to maximize their own consumption by extracting rents that are costly to growth. When citizens are able to depose politicians through elections, governments are tightly controlled. The rents politicians are able to extract increase in the length of their term. The effect of the threshold of criminal responsibility on the ability of voters to control politicians is non-monotonic. When tenure in power does not depend on economic performance, rent extraction is limited only by the effectiveness of oversight mechanisms but does not depend on time horizons of the rulers. Accumulation constraint binds only rulers who are neither politically nor criminally accountable.     

Lessons from the 2008 Financial Crisis: Policy Responses to External Shocks in Uruguay

The 2008 global economic crisis affected the Uruguayan economy through two main channels: collapse in global trade and drop in capital flows. In response to the crisis, the Uruguayan government increased public consumption and investment and expanded social benefits to unemployed workers. We apply a computable general equilibrium model linked to microsimulations to analyze the distributional impacts of these policies and assess their effectiveness. We find that an increase in public investment was the only policy effective in mitigating the negative impact of the crisis on extreme poverty. The other policies reinforced the negative impact of the crisis on the poor. All three policies are costly and have an important impact on macroeconomic variables and the structure of production and export, while they have only slight or negative results on poverty and household income. More focalized policies, such as direct cash transfers, might have better results in terms of cost‐benefit.     

The Political Influence of Voters’ Interests on SEC Enforcement

I examine whether political influence as a response to voters’ interest in employment levels is reflected in the enforcement actions of the SEC. I find that large employers are less likely to experience SEC enforcement actions. Next, I examine whether variations in politicians’ sensitivity to employment levels result in variations in enforcement against large employers. I find that large employers are less likely to face enforcement actions during presidential elections if they are based in politically important states. Large employers also face fewer enforcement actions if they are based in high‐unemployment states during elections of senators who serve on SEC oversight committees. Large employers based in high‐unemployment districts enjoy lower enforcement if their members of Congress serve on SEC oversight committees. The findings suggest that voters’ interests are reflected in SEC enforcement.     

Did the New Deal solidify the 1932 Democratic realignment?

The critical election of 1932 represented a turning point in the future electoral successes of the Democrats and Republicans for over three decades. This paper seeks to measure the importance of the New Deal in facilitating the Democrats' control of the federal government well into the 1960s. We test whether long-differences in the county-level electoral support for Democratic presidential candidates after the 1930s can be attributed to New Deal interventions into local economies. We also investigate more narrowly whether voters rewarded Roosevelt from 1932 to 1936 and from 1936 to 1940 for his efforts to stimulate depressed local economies. Our instrumental variable estimates indicate that increasing a county's per capita New Deal relief and public works spending from nothing to the sample mean ($145) would have increased the long-run support for the Democratic party by 2 to 2.5 percentage points. We further find that the long-run shift toward the Democratic party after 1928 was not a function of the Roosevelt landslide victory in 1932. Roosevelt's ability to win over voters during the 1936 and 1940 elections with New Deal spending, however, did matter for the long-term.     

Corporate innovation in China and its implications

China's current economic transition policies focus on shifting from export‐driven manufacturing towards high‐end, high‐tech research and development (R&D), and domestic consumption. Since the early 2000s the government has issued a series of policies and guidelines to encourage innovation. Both in‐house R&D investment and the number of patent grants/applications have seen considerable growth in recent years. More specifically, industry‐funded R&D was responsible for more than three quarters of total in‐house R&D investment. Despite the rapid growth in R&D expenditure and the number of patents, China's corporate innovation still faces many obstacles and challenges. To further stimulate corporate innovation, the government may need to create an environment of fair competition for domestic enterprises, encourage the growth of institutional investors and their active participation in corporate governance, and improve the efficiency of financial systems. The experience of China in promoting innovation provides policy approaches and implications from which other emerging economies can learn.     

House Price Dynamics with Household Debt: The Korean Case*

This paper revisits the long‐run determinants of house prices, and analyzes the house price dynamics using Korean data taking into account the close relationship between house prices and household debt. The results of cointegrating regression indicate that the major portion of the rise in house prices in Korea over the last 15 years can be explained by changes in macro variables such as household income, the demographic structure, the user cost of home ownership and the housing stock supply. The results also confirm that house prices are, indeed, closely linked to the steep increase in household debt seen over this period. Estimation of an error correction model shows that the extent of convergence of actual house prices to their long‐run equilibrium path has weakened somewhat since the global financial crisis while the speed of convergence has slowed, indicating structural changes in the Korean housing market. Finally, a forecast for house prices over the next several years suggests that they are unlikely to rise as sharply as they did in the 2000s, given the likely changes in the macro‐financial environment, and that their future path will be closely associated with that of the household debt‐to‐income ratio.     

Survey of Recent Developments

Following the remarkably successful 2014 parliamentary and presidential elections in Indonesia, attention now turns to the new president and his agenda for the next five years. President Joko Widodo, known as Jokowi, has emphasised the importance of strong economic growth and rising living standards. But he faces significant, broad-ranging economic challenges and, perhaps not surprisingly, serious discussion of these issues did not feature during the election campaigns. In many respects the economy is at a crossroads, facing the choice between a business-asusual scenario of no reform and consequently sluggish economic growth, and a politically difficult reform agenda that would set it on a higher growth path. Economic policymakers regard the events of 2013 as a mini economic crisis, and they feel vindicated in their explicit preference for stability over growth—that is, for slowing the economy through tighter fiscal and monetary policy and letting the currency decline. For now, the economy is slowing but holding up quite well, especially by comparative international norms and considering foreign and domestic headwinds, including possible macroeconomic and financial fragilities. Here we examine these headwinds—from global economic volatility and declining commodity prices, particularly in the wake of the so-called Bernanke shock of May 2013, to the continuing policy drift at home. We investigate whether there is evidence of an emerging adjustment from the commodity-driven growth of the past decade to some of the traditional tradables sectors, especially manufacturing. While the commodity boom is almost certainly a thing of the past—at least at levels witnessed since 2005—the country's political narratives and the government's microeconomic policies appear to be still premised on an era of plenty funded by a disappearing boom. We speculate on likely options and directions for what in all likelihood will be a ‘Jokowi decade’.     

Transitions from Welfare and the Employment Prospects of Low-Skill Workers

This study examines the effects that labor market conditions and welfare policy changes had on single mothers' welfare participation and economic outcomes using longitudinal, individual-level data from the 1992 and 1993 panels of the Survey of Income and Program Participation (SIPP). The study uses special versions of the SIPP panels that include state and county identifiers and links the individual information to county-specific measures of low-skill employment opportunities and state measures of welfare policies. It estimates transition models of program entry and exit and regression models of economic outcomes. The study finds that employment conditions and welfare benefit levels were significant determinants of single mothers' welfare participation and economic success over the period 1992-95. However, it does not find statistically distinguishable differences in participation and economic success between states that did and did not reform their welfare programs through waivers to the federal rules.