Public utility regulation and bond ratings

This paper investigates the extent to which political factors, which vary across state Public Utility Commissions, affect electric utility bond ratings. The paper focuses on the effects of the commissioner selection method (election or appointment) and other politically determined variables on bond ratings of privately owned and regulated electric utilities. The paper develops a generalization of ordered logit that allows the latent risk measure to have a skewed and thicktailed distribution. The distributional assumption underlying the standard logit model is strongly rejected. Empirically, both political variables and financial variables are determinants of electric utility bond ratings, and election of the PUC has a strong negative effect on bond ratings.     

Consumer capture of regulatory institutions: The creation of public utility consumer advocates in the United States

We examine the conditions under which state legislatures in the United States organized public utility consumers during the 1970s and 1980s by creating independent consumer advocates with resources and authority to intervene in public utility rate-making procedures. While economic factors, notably utility fuel cost increases, were important predictors, state political conditions were estimated to have a larger impact on the probability of implementation. We find that the pattern of adoption is consistent with the hypothesis that legislatures deploy institutions as a mechanism for insulating regulatory policies against future reform: in general, Democrat-controlled governments were significantly more likely to implement consumer advocates when they were less certain about being re-elected to office during this period. We find also that the effect of political re-election expectations was particularly acute for the creation of advocates representing solely residential consumers, a relatively disorganized interest group. Our results suggest that legislatures organize and publicly fund interest groups to protect supportive but vulnerable groups against adverse future political environments.     

Expressions of Distrust: Third-Party Voting and Cynicism in Government

Voter distrust of the national government is an ongoing theoretical concern for scholars who study voting behavior in the United States. Previous research demonstrates that distrustful voters are less likely to vote for major party candidates than their more trusting counterparts. Using the American National Election Survey, we explore the relationship between citizen distrust and voting for three major third-party challengers (Wallace, Anderson, and Perot) and the use of trust levels as predictors of third- party voting. We find citizen trust levels are significant and strong predictors of third-party voting, independent of other common explanatory variables of vote choice. We also find trust levels are stable over time, and we find little evidence to support the argument that trust levels measure trust of incumbent political figures.     

What makes fiscal consolidations last? A survival analysis of budget cuts in Europe (1960–2004)

This article examines the political and economic determinants of the relative duration of fiscal consolidations in Europe. The study focuses on the fifteen Member States that formed the EU between 1960 and 2004, and applies survival analysis techniques to their fiscal data. We find evidence that the probability of ending a period of fiscal consolidation depends on the debt level, the magnitude of the adjustment, the relative contribution of spending cuts, and the degree of cabinet fragmentation. Most importantly we also find that under a stricter definition of fiscal consolidation, political variables, such as coalition size and election year, gain importance with respect to economic variables as predictors of the probability of ending an episode of fiscal consolidation. This relative importance of political variables weakened in the run-up to EMU, probably because countries had to consolidate irrespective of their political constraints.     

The relationship between political attitudes and political participation: Evidence from monozygotic twins in the United States,Sweden, Germany,and Denmark

Many studies have shown that political efficacy, interest in politics, and political knowledge are strongly related to political participation. In most analyses, these variables are described as having a causal effect on participation. In this paper, we examine the extent to which the relationship between political attitudes and participation is confounded by familial factors. By using the discordant twin design, which relates within-pair differences in political attitudes to within-pair differences in political participation, we are able to examine the relationship net of confounding factors rooted in genes and the early rearing environment. Using four samples of monozygotic twins from the United States, Sweden, Germany, and Denmark, we find that the relationship between political attitudes and political participation is confounded to a large extent. This study makes an important contribution to the literature on political attitudes and political participation given the longstanding idea that attitudes cause political participation. Our findings also have practical implications for those interested in elevating levels of political participation. In addition, they have important implications for how scholars theorize about, model, and examine political participation in the future.     

Self-deception as the root of political failure

I consider models of political failure based on self-deception. Individuals discard free information when that information damages their self-image and thus lowers their utility. More specifically, individuals prefer to feel good about their previously chosen affiliations and shape their worldviews accordingly. This model helps explain the relative robustness of political failure in light of extensive free information, and it helps explain the rarity of truth-seeking behavior in political debate. The comparative statics predictions differ from models of either Downsian or expressive voting. For instance, an increased probability of voter decisiveness does not necessarily yield a better result. I also consider political parties as institutions and whether political errors cancel in the aggregate. I find that political failure based on self-deception is very difficult to eliminate.     

Do ideological and political motives really matter in? the?public choice of local services management? Evidence from urban water services in Spain

This paper studies the influence of ideology and political motives on the choice of management for urban water services. Our contribution is two-fold. Firstly, we use a considerably more detailed set of variables to represent ideological and political motives than previous research. Secondly, the variables that explain local politicians’ decisions are observed at the time decision-making occurs, rather than at a later date. Beyond pragmatic reasons, we find that ideological and political motives also matter when explaining decisions regarding the management of water services. Furthermore, considering the time dimension of decision-making noticeably improves the explanatory power of our model.     

Foreign Aid,Democratization, and Civil Conflict: How Does Democracy Aid Affect Civil Conflict?

It has been suggested that democratizing states are prone to civil wars. However, not all democratizing states experience domestic political violence. We argue that one of the key factors that “shelters” some democratizing states from domestic political violence is the receipt of democracy aid. Democratizing states that receive high levels of democracy assistance are less likely to experience civil conflict than countries that receive little or no external democracy assistance. During democratic transitions, the central authority weakens and uncertainty about future political commitments and promises among domestic groups increases. Democracy aid decreases the risk of conflict by reducing commitment problems and uncertainty. Using an instrumental variables approach that accounts for potential endogeneity problems in aid allocation, we find empirical support for our argument. We conclude that there is a potential path to democracy that ameliorates the perils of democratization, and democracy assistance programs can play a significant positive role in this process.     

Electoral politics and monetary policy: does the Bank of Canada contribute to a political business cycle?

In this paper I apply the work of Abrams and Iossifov (Public Choice 129:249–262, 2006) to monetary policy in Canada to see if same political party affiliation is needed to produce evidence of political opportunism. After modifying their analysis to maintain the time-series consistency of their variables for Canada, I find that both an error correction model and a Taylor rule reformulation of their test generate evidence consistent with same party political opportunism, but only weakly so. On the other hand, I also find the presence of more traditional indicators of political influence. In particular, the data suggest that the election of a Liberal party government, a decrease in the degree of political competition, and to a lesser extent, the election of a minority government all positively influence the expansiveness of Canadian monetary policy.     

Estimating the Effect of Elite Communications on Public Opinion Using Instrumental Variables

A central question in the study of democratic polities is the extent to which elite opinion about policy shapes public opinion. Estimating the impact of elites on mass opinion is difficult because of endogeneity, omitted variables, and measurement error. This article proposes an identification strategy for estimating the causal effect of elite messages on public support for European integration employing changes in political institutions as instrumental variables. We find that more negative elite messages about European integration do indeed decrease public support for Europe. Our analysis suggests that OLS estimates are biased, underestimating the magnitude of the effect of elite messages by 50%. We also find no evidence that this effect varies for more politically aware individuals, and our estimates are inconsistent with a mainstreaming effect in which political awareness increases support for Europe in those settings in which elites have a favorable consensus on the benefits of integration.     

Outspoken Insiders: Political Connections and Citizen Participation in Authoritarian China

Few political systems are completely closed to citizen participation, but in nondemocratic systems and developing democracies, such participation may come with risks. In these contexts where fear and uncertainty may be high, why do some citizens still take action and make complaints to authorities? The resource mobilization model identifies the importance of time, money, and civic skills as resources that are necessary for participation. In this paper, we build on this model and argue that political connections—close personal ties to someone working in government—can also constitute a critical resource, especially in contexts with weak democratic institutions. Using data from both urban and rural China, we find that individuals with political connections are more likely to contact authorities with complaints about government public services, despite the fact that they do not have higher levels of dissatisfaction with public service provision. We conduct various robustness checks, including a sensitivity analysis, and show that this relationship is unlikely to be driven by an incorrect model specification or unobserved confounding variables.     

A positive theory of the earnings relationship of unemployment benefits

In a wage bargaining model, a stronger earnings relationship of unemployment benefits may reduce wages. Therefore, the benefit structure significantly influences profits and trade union utility, raising the question as to how the benefit structure is determined in the political process. We consider a government that chooses the earnings relationship in order to maximize its political support. Our model predicts a strong earnings relationship under right-wing governments and a weak relationship when unions are influential. Using panel data for 19 OECD countries, we find support for these theoretical predictions. Moreover, we show that the earnings relationship varies negatively with openness.     

The hazard rate of political regimes

We present a preliminary study on the stability of political regimes. In a longitudinal data set we study the effect of some observable economic and political conditions on the hazard rate of different types of political regimes. We find that economic development has a stabilizing effect in countries with democratic political institutions, but rich autocracies do not show a lower hazard rate than less developed autocracies. While the stability of autocracies is not affected by their degree of economic development, it is greatly associated with the degree of popular discontent. Widespread discontent with leaders in autocratic regimes highly increases their hazard rate. This relationship is much weaker for regimes with democratic institutions. We also find a non-monotonic time dependence pattern for the hazard rate of political regimes. Political regimes are found to be at an increasing risk of collapse during the first years, with their hazard rates reaching a peak around the fourth year.     

Social Capital and Political Trust in Finland: An Individual-level Assessment

Political trust has in previous studies mainly been associated, either positively or negatively with a set of political variables, such as subjective knowledge of and interest in political issues, political efficacy, national pride, post-materialist values and corruption permissiveness. More recently, it has been debated whether or not indicators of social capital also have an impact on political trust. It has been argued that social capital helps to sustain civic virtues and that lack of it will create democratic problems like political dissatisfaction and declining political participation. While trends in social capital seem stable and high at the aggregate level in Finland, the level of political trust has varied to a much larger degree. In this article, indicators of social capital, political variables and social background variables are set against the Finns' trust in politicians and the parliament as well as their satisfaction with democracy. The analysis shows that social capital, as defined by a set of variables comprised of interpersonal trust and voluntary organisational activism, does not, en bloc, prove to be a powerful predictor of political trust. However, when the social capital items are examined as single factors, interpersonal trust seems to have strong impact on all levels of political trust, while the influence of voluntary organisational activity is less evident.     

Politics of E‐Government: E‐Government and the Political Control of Bureaucracy

This case study reports an innovative e‐government experiment by a local government in Seoul, South Korea—Gangnam‐gu. A new local political leadership in Gangnam made strategic use of e‐government applications to exert greater political control over the local civil service bureaucracy. The authors find that e‐government applications possess political properties that can be applied effectively by the political leadership as instruments to improve control over the government bureaucracy as well as to enhance essential government accountability and transparency. The political circumstances underlying e‐government development as well as its impact on local government are reported, along with key variables associated with this innovation and directions for future research.     

Political and institutional environment and privatization prices

We study the link between the political and institutional context and privatization sales prices. The latter serves as a measure for assessing the extent to which privatization goals have been met. Whereas this link has been studied theoretically, there are very few, if any, empirical papers on this relationship. We use data from 308 privatizations around the world and apply a cross-country approach, including instrumental variables. We find that while the overall political regime does not matter much for prices, the political processes beyond the basic regime do matter. Institutional context also produces a significant impact on prices. Both results are robust to changes in specification.     

It’s the weather, stupid! Individual participation in collective May Day demonstrations

We investigate the possible explanations for variations in aggregate levels of participation in large-scale political demonstrations. A simple public choice inspired model is applied to data derived from the annual May Day demonstrations of the Danish labor movement and socialist parties taking place in Copenhagen in the period 1980–2011. The most important explanatory variables are variations in the weather conditions and consumer confidence, while political and socio-economic conditions exhibit no robust effects. As such accidental or non-political factors may be much more important for collective political action than usually acknowledged and possibly make changes in aggregate levels of political support seem erratic and unpredictable.     

Does political trust matter? An empirical investigation into the relation between political trust and support for law compliance

Scholars have repeatedly expressed concern about the consequences low levels of political trust might have for the stability of democratic political systems. Empirical support and the identification of causal mechanisms for this concern, however, are often lacking. In this article, the relation between political trust and law‐abiding attitudes is investigated. It is expected that citizens with low levels of trust in the institutions of the political system will find it more acceptable to break the law. As a result, low levels of political trust might undermine the effectiveness and legitimacy of government action and its ability to implement legislation. Based on survey data from 33 European countries using the 1999–2001 European Values Study (N = 41,125), the relation between political trust and legal permissiveness is examined using a multilevel ordered logistic regression analysis. The results show that respondents with low levels of political trust are significantly more likely to accept illegal behaviour such as tax fraud than respondents with high levels of political trust. Since it is known from earlier research that actors who are permissive towards law‐breaking behaviour are more likely to commit these acts themselves, the hypothesis that low levels of political trust will be associated with less law compliance within a society is supported.     

Political environment and voluntary disclosure in the U.S.: Evidence from the Carbon Disclosure Project

We investigate whether the political leaning of the state where a given firm is headquartered is related to that firm's decision to voluntarily disclose climate change information. We study S&P 500 firms that were surveyed by the Carbon Disclosure Project (CDP) and find that firms headquartered in more Democratic states are more likely to disclose carbon emissions information to the CDP. Furthermore, firms in more Democratic states are more likely to permit public disclosure of their survey responses and tend to receive higher disclosure scores. We consider two political variables, one based on political power and one based on public political preference. Our results are consistent with political power driving the firm's willingness to voluntarily disclose information about climate change. These results suggest that the relation between the political environment and disclosure is more closely linked to concerns over regulatory threats as opposed to acquiescence to social norms.     

Presidential Press Conferences over Time

Scholars have debated whether the president's public activities are a function of political and economic factors (presidency-centered variables) or individual presidents and their administration's tendencies (president-centered variables). This article examines one of the only quantitative studies that assesses the influence of these variables on presidential press conferences over time. I replicate this study (Hager and Sullivan 1994) and find the authors' conclusions to be misleading. I then present methodologically correct analyses that show—consistent with the qualitative evidence—that the behavior of individual presidents offers the best explanation of press conferences over time.