Politics and economics

Rafael Ch, Jacob Shapiro, Abbey Steele, Juan F. Vargas, 29 January 2019

It is widely accepted that war between states can lead to increased fiscal capacity. Yet, there is no similarly clear, historically consistent accounting of how civil wars have affected state capacity and tax revenues. Using recent evidence from Colombia, this column shows that municipalities affected by internal conflict have tax institutions consistent with the preferences of the parties that have managed to inflict more violence in the past. Internal armed conflict can help interest groups capture municipal institutions for their own private benefit, impeding state-building.

Nicholas Crafts, 15 January 2019

Brexit in 2019 and the banking crisis in 2007 to 2009 are usually seen as unrelated events. This column argues that they are in fact closely connected. The austerity policies embarked on in response to the fiscal damage resulting from the banking crisis triggered the protest votes of left-behind voters, which at the margin allowed Leave to win the referendum vote. The implication is that the economic costs of the banking crisis are much larger than is usually supposed.

Vitezslav Titl, Benny Geys, 13 January 2019

Despite public concerns about the role and influence of big donors on politics, questions remain regarding the mechanisms behind political favouritism to donor corporations. Using 2006–2014 data on political donations and public procurement allocations in the Czech Republic, this column finds that firms that increase their donations to a political party see the value of their public procurement contracts rise in the following year. Contracting authorities appear to engage in different forms of strategic behaviour to favour corporate donors, who tend to face fewer competitors in more regulated and open procurement procedures.

Gene Grossman, 11 January 2019

It blows the minds of economists when voters choose protectionist policies that, they point out, make most of them poorer. Gene Grossman tells Tim Phillips how trade models can explain this, if they incorporate insights from other social sciences.

Toke Aidt, Jagjit Chadha, Hamid Sabourian, 11 January 2019

Unanimous agreement on the UK’s Brexit question is clearly not going to be achievable. But as this column argues, using a sequential voting system, it is within reach to structure the democratic process so that a voting procedure is fair to all views and the outcome is preferred by a majority to any other alternatives.

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