Is Vote Buying Effective? Evidence from a Field Experiment in West Africa

Vote buying, i.e. cash for votes, happens frequently in many parts of the world. However, in the presence of secret ballots, there is no obvious way to enforce vote transactions. To infer effects of vote buying on electoral behaviour, I designed and conducted a randomised field experiment during an election in São Tomé and Príncipe. I follow a voter education campaign against vote buying, using panel survey measurements as well as disaggregated electoral results. Results show that the campaign reduced the influence of money offered on voting, decreased voter turnout and favoured the incumbent. This evidence suggests that vote buying increases participation and counteracts the incumbency advantage.

Author: Pedro C. Vicente

http://onlinelibrary.wiley.com/doi/10.1111/ecoj.12086/abstract 

International Trade and Institutional Change: Medieval Venice's Response to Globalization

International trade can have profound effects on domestic institutions. We examine this proposition in the context of medieval Venice circa 800–1600. Early on, the growth of long-distance trade enriched a broad group of merchants who used their newfound economic muscle to push for constraints on the executive, that is, for the end of a de facto hereditary Doge in 1032 and the establishment of a parliament in 1172. The merchants also pushed for remarkably modern innovations in contracting institutions that facilitated longdistance trade, for example, the colleganza. However, starting in 1297, a small group of particularly wealthy merchants blocked political and economic competition: they made parliamentary participation hereditary and erected barriers to participation in the most lucrative aspects of long-distance trade. Over the next two centuries this led to a fundamental societal shift away from political openness, economic competition, and social mobility and toward political closure, extreme inequality, and social stratification. We document this oligarchization using a unique database on the names of 8,178 parliamentarians and their families’ use of the colleganza in the periods immediately before and after 1297. We then link these families to 6,959 marriages during 1400–1599 to document the use of marriage alliances to monopolize the galley trade. Monopolization led to the rise of extreme inequality, with those who were powerful before 1297 emerging as the undisputed winners.

Authors: Diego Puga and Daniel Trefler

http://qje.oxfordjournals.org/content/129/2/753.full.pdf+html 

Time Allocation and Task Juggling

A single worker allocates her time among different projects which are progressively assigned. When the worker works on too many projects at the same time, the output rate decreases and completion time increases according to a law which we derive. We call this phenomenon “task juggling” and argue that it is pervasive in the workplace. We show that task juggling is a strategic substitute of worker effort. We then present a model where task juggling is the result of lobbying by clients, or coworkers, each seeking to get the worker to apply effort to his project ahead of the others’

Authors: Decio Coviello, Andrea Ichino, and Nicola Persico

http://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.104.2.609 

Harmful signaling in matching markets

Several labor markets, including the job market for new Ph.D. economists, have recently developed formal signaling mechanisms. We show that such mechanisms are harmful for some environments. While signals transmit previously unavailable information, they also facilitate information asymmetry that leads to coordination failures. In particular, we consider a two-sided matching game of incomplete information between firms and workers. Each worker has either the same “typical” known preferences with probability close to one or “atypical” idiosyncratic preferences with the complementary probability close to zero. Firms have known preferences over workers. We show that under some technical condition if at least three firms are responsive to some workerʼs signal, the introduction of signaling strictly decreases the expected number of matches.

Author: Alexey Kushnir

http://www.sciencedirect.com/science/article/pii/S0899825613000559 

Bones of Contention: The Political Economy of Height Inequality

Human osteological data provide a rich, still-to-be-mined source of information about the distribution of nutrition and, by extension, the distribution of political power and economic wealth in societies of long ago. On the basis of data we have collected and analyzed on societies ranging from foraging communities to the ancient Egyptian and modern European monarchies, we find that the shift from hunting and gathering to complex fishing  techniques and to labor-intensive agriculture opened up inequalities that had discernible effects on human health and stature. But we also find that political institutions intervened decisively in the distribution of resources within societies. Political institutions appear to be shaped not only by economic factors but also by military technology and vulnerability to
invasion.

Authors: Carles Boix, Frances Rosenbluth

http://journals.cambridge.org/download.php?file=%2FPSR%2FPSR108_01%2FS0003055413000555a.pdf&code=a2d19813158201210e528452fc6608c7

Boundedly Rational Opinion Dynamics in Directed Social Networks: Theory and Experimental Evidence

This paper investigates opinion dynamics and social influence in directed communication networks. We study the properties of a generalized boundedly rational model of opinion formation in which individuals aggregate the information they receive by using weights that are a function of their neighbors' degree. We then present an experiment designed to test the predictions of the model. We find that both Bayesian updating and boundedly rational updating a la DeMarzo et al. (2003) are rejected by the data. Consistent with our theoretical predictions, the social influence of an agent is positively and significantly a ected by the number of individuals she listens to. When forming their opinions, agents do take into account the structure of the communication network, although in a sub-optimal way.

Authors: Pietro Battiston and Luca Stanca

http://dipeco.economia.unimib.it/repec/pdf/mibwpaper267.pdf 

Collection of Articles on Credit Constraints

Credit Constraints and the Cyclicality of R&D Investment: Evidence from France

We use a French firm-level data set containing 13,000 firms over the period 1994–2004 to analyze the relationship between credit constraints and firms’ R&D behavior over the business cycle. Our main results can be summarized as follows: (i) R&D investment is countercyclical without credit constraints, but it becomes procyclical as firms face tighter credit constraints; (ii) this result is only observed for firms in sectors that depend more heavily upon external finance, or that are characterized by a low degree of asset tangibility; (iii) in more credit-constrained firms, R&D investment plummets during recessions but does not increase proportionally during upturns.

 Authors: Philippe Aghion, Philippe Askenazy, Nicolas Berman, Gilbert Cette, Laurent Eymard

http://onlinelibrary.wiley.com/doi/10.1111/j.1542-4774.2012.01093.x/abstract?deniedAccessCustomisedMessage=&userIsAuthenticated=false

Volatility and growth: Credit constraints and the composition of investment

How does uncertainty and credit constraints affect the cyclical composition of investment and thereby volatility and growth? This paper addresses this question within a model where firms engage in two types of investment: a short-term one; and a long-term one, which contributes more to productivity growth. Because it takes longer to complete, long-term investment has a relatively less cyclical return; but it also has a higher liquidity risk. The first effect ensures that the share of long-term investment to total investment is countercyclical when financial markets are perfect; the second implies that this share may turn procyclical when firms face tight credit constraints. A novel propagation mechanism thus emerges: through its effect on the cyclical composition of investment, tighter credit can lead to both higher volatility and lower mean growth. Evidence from a panel of countries provides support for the model's key predictions.

Authors: Philippe Aghiona, George-Marios Angeletosb, Abhijit Banerjeeb, Kalina Manova

http://www.sciencedirect.com/science/article/pii/S0304393210000176

Credit Constraints, Heterogeneous Firms, and International Trade

Financial market imperfections severely restrict international trade flows because exporters require external capital. This article identifies and quantifies the three mechanisms through which credit constraints affect trade: the selection of heterogeneous firms into domestic production, the selection of domestic manufacturers into exporting, and the level of firm exports. I incorporate financial frictions into a heterogeneous-firm model and apply it to aggregate trade data for a large panel of countries. I establish causality by exploiting the variation in financial development across countries and the variation in financial vulnerability across sectors. About 20%–25% of the impact of credit constraints on trade is driven by reductions in total output. Of the additional, trade-specific effect, one-third reflects limited firm entry into exporting, while two-thirds are due to contractions in exporters' sales. Financially developed economies export more in financially vulnerable sectors because they enter more markets, ship more products to each destination, and sell more of each product. These results have important policy implications for less developed nations that rely on exports for economic growth but suffer from weak financial institutions.

Author: Kalina Manova

http://restud.oxfordjournals.org/content/80/2/711.short 

Polarized Business Cycles

We are motivated by four stylized facts computed for emerging and developed economies: (i) business cycle movements are wider in emerging countries; (ii) economies in emerging countries experience greater economic policy uncertainty; (iii) emerging economies are more polarized and less politically stable; and (iv) economic policy uncertainty is positively related to political polarization. We show that a standard real business cycle (RBC) model augmented to incorporate political polarization, a `polarized business cycle' (PBC) model, is consistent with these facts. Our main hypothesis is that fluctuations in economic variables are not only caused by innovations to productivity, as traditionally assumed in macroeconomic models, but also by shifts in political ideology. Switches between left-wing and right-wing governments generate uncertainty about the returns to private investment, and this a ects real economic outcomes. Since emerging economies are more polarized than developed ones, the e ects of political turnover are more pronounced. This translates into higher economic policy uncertainty and ampli es business cycles. We derive our results analytically by fully characterizing the long-run distribution of economic and scal variables. We then analyze the e ect of a permanent increase in polarization on PBCs.

Authors:  Marina Azzimontiy and Matthew Talbertz

http://www.philadelphiafed.org/research-and-data/publications/working-papers/2013/wp13-44.pdf