Conference Agenda

Overview and details of the sessions of this online conference.

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Session Overview
B01: Political Economy I
Wednesday, 18/Aug/2021:
12:30pm - 2:00pm

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12:30pm - 12:52pm

Public Goods and Diversity in Democracies and Non-Democracies

Roxanne Raabe1, Christian J. Sander1, Andrea Schneider2

1University of Münster, Germany; 2Jönköping International Business School, Sweden

This paper analyzes how ethnic diversity affects the provision of public goods in democratic and non-democratic societies where political parties compete for voters' support by offering a mix of private and public goods. We show that increasing ethnic diversity reduces the provision of public goods in democracies but has no similar effect in non-democracies. We can confirm our hypothesis measuring the provision of public goods with government expense, expenditure for health and life expectancy. Other proxies measuring the provision of public goods (e.g., infant mortality or safe water) do not provide evidence that the link between ethnic diversity and public good provision depends on the political regime.

Raabe-Public Goods and Diversity in Democracies and Non-Democracies-291.pdf

12:52pm - 1:15pm

Democratic Redistribution with Plutocratic Feedback Loops

Dylan T. Moore

University of Michigan

In a democratic society where economic inequality and political inequality are mutually reinforcing, is plutocracy inevitable? I explore this question using a simple dynamic model of democratic redistribution. Two candidates iteratively compete in elections fought over redistributive policy. Campaign spending is financed by citizen political donations, creating a feedback loop through which the current distribution of income affects the future distribution. The impact of these plutocratic feedback loops depends on assumptions about citizen political and economic behavior, as well as campaign spending technology. Long run convergence to a plutocratic equilibrium can occur for arbitrarily small levels of initial economic inequality. However, the opposite scenario is also possible: a society which is initially extremely unequal may nonetheless be destined for egalitarianism. The long run distribution of income may also exhibit extreme sensitivity to initial conditions. Tiny differences in initial inequality can determine whether democratic redistribution induces or prevents plutocracy.

Moore-Democratic Redistribution with Plutocratic Feedback Loops-381.pdf

1:15pm - 1:37pm

Protectionism and Economic Growth: Causal Evidence from the First Era of Globalization

Fabian Ruthardt1, Niklas Potrafke1, Kaspar Wüthrich2

1ifo Institute, Germany; 2University of California San Diego

We investigate how protectionist policies influence short-run economic growth. Our empirical strategy exploits an extraordinary tax scandal that gave rise to an unexpected change of government in Sweden. A free-trade majority in parliament was overturned by a protectionist majority in 1887. We employ the synthetic control method to select control countries against which economic growth in Sweden can be compared. We do not find evidence suggesting that protectionist policies influenced economic growth and examine channels why. Tariffs increased government revenue. However, the results do not suggest that the protectionist government stimulated the economy by increasing government expenditure.

Ruthardt-Protectionism and Economic Growth-375.pdf

1:37pm - 2:00pm

Impact of European Cohesion Policy on regional growth: _When time isn't money_

Benoit Dicharry

University of Strasbourg, France

This paper contributes to the literature discussing the effects of the EU Funds on GDP growth by revealing the causal impact of regional absorption's speed. The analysis is conducted using a regression discontinuity design approach with heterogeneous treatment on NUTS-2 regions during the period 2000-2016. We show that a faster absorption, especially in the Mediterranean regions, is associated with worse economic outcomes of the Objective 1 treatment. These estimation results are robust to changes in specifications, sample compositions and outcome variables. Our results imply that the incentives provided by the European Commission to fasten absorption have a counter-productive impact.

Dicharry-Impact of European Cohesion Policy on regional growth-118.pdf

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