{"title":"Heterogeneity of institutions and model uncertainty in the income inequality nexus","authors":"Pinar Deniz , Thanasis Stengos","doi":"10.1016/j.ejpoleco.2025.102670","DOIUrl":"10.1016/j.ejpoleco.2025.102670","url":null,"abstract":"<div><div>This study revisits the drivers of income inequality with political institutions at the core. We take a multidimensional institutional approach by defining political institutions in terms of governance, political freedom, political fragmentation and political scale. We carry out an extensive empirical analysis of the role of political institutions by decomposing it into distinct elements and providing available proxies for each dimension. Considering the difficulty and the lack of consensus and clarity regarding model selection in the literature, we follow a model averaging methodology to deal with the issue of model uncertainty and model specification that impacts the role of institutions. We combine an analysis of club convergence, a clustering mechanism according to the long term income trajectories of the countries, with Bayesian Model Averaging (BMA) to determine the most important variables that affect inequality out of a large set of potential determinants for each homogeneous country clusters in terms of their development path. Our results show that drivers of income inequality do not act the same irrespective of different economic development patterns and that there is no “one size fits all” policy prescription that links political institutions and income inequality.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102670"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143838383","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Political parties’ ideological bias and convergence in economic outcome","authors":"Zeeshan Hashim , Jan Fidrmuc , Sugata Ghosh","doi":"10.1016/j.ejpoleco.2025.102669","DOIUrl":"10.1016/j.ejpoleco.2025.102669","url":null,"abstract":"<div><div>In democracies, policies are jointly shaped by voters' preferences and politicians' (or parties’) ideological biases. We explore the relative importance of the latter on some key economic outcomes – growth rate, inflation and inequality – in a broad sample of 71 democracies from 1995 to 2019. We find evidence that both left-wing and right-wing governments deliver convergent outcomes as regards growth, inflation and inequality. The same applies to the policy outcome of economic freedom. This indicates that consolidated democracies maintain continuity in economic policies, and a change in government from one political ideology to another with a different ideology does not significantly alter economic policy outcomes. However, we find <em>divergence</em> in hybrid regimes; inequality and economic freedom are reduced under leftist governments, and economic freedom is enhanced by rightist governments.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102669"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143768069","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"How central bank independence shapes monetary policy communication: A Large Language Model application","authors":"Lauren Leek , Simeon Bischl","doi":"10.1016/j.ejpoleco.2025.102668","DOIUrl":"10.1016/j.ejpoleco.2025.102668","url":null,"abstract":"<div><div>Although central bank communication is a core monetary policy and accountability tool for central banks, little is known about what shapes it. This paper develops and tests a theory regarding a previously unconsidered variable: central bank independence (CBI). We argue that increases in CBI alter the pressures central banks face, compelling them to address these pressures to maintain their reputation. We fine-tune and validate a Large Language Model (Google’s Gemini) to develop novel textual indices of policy pressures regarding monetary policy communication of central banks in speeches of 100 central banks from 1997 to 2023. Employing a staggered difference-in-differences and an instrumental variable approach, we find robust evidence that an increase in independence decreases the narrow focus on price stability and increases financial pressures discussed in monetary policy communication. These results are not, as generally is assumed, confounded by general changes in communication over time or singular events, in particular, the Global Financial Crisis.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102668"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143886683","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Social welfare and the group size paradox","authors":"Paul Pecorino","doi":"10.1016/j.ejpoleco.2025.102673","DOIUrl":"10.1016/j.ejpoleco.2025.102673","url":null,"abstract":"<div><div>Tullock (1967) argues that the welfare costs of tariffs and monopoly extend beyond traditional deadweight loss measures to include both resources devoted to obtaining the transfer and resources spent resisting the transfer. This includes resources spent lobbying the government for the implementation of a favorable policy. Olson (1965) argues that lobbying activity frequently provides a nonexcludable good to an interest group and therefore may be subject to a free-rider problem. I use a Tullock (1980) style contest to analyze how the free-rider problem, the extent of the deadweight loss and bias in the policy process interact in determining the social loss resulting from lobbying activity. For plausible parameter values, an increase in the ability of the group potentially subject to the transfer to overcome the free-rider problem worsens social welfare by increasing expenditure in the transfer-seeking game even as it makes the distortion inducing transfer less likely. There are also plausible parameter values under which an increase in the bias of the policy process towards the group seeking the transfer raises social welfare by reducing expenditures in the transfer seeking game even as it makes the distortion inducing transfer more likely.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102673"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143758963","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Rule of law and economic performance: A meta-regression analysis","authors":"Egnate Shamugia","doi":"10.1016/j.ejpoleco.2025.102677","DOIUrl":"10.1016/j.ejpoleco.2025.102677","url":null,"abstract":"<div><div>This paper employs a meta-regression analysis to investigate the influence of the rule of law on economic performance. We analyze 72 empirical studies (466 estimates) on the relationship between the rule of law and economic performance. Our findings indicate the presence of publication selection biases; however, they also confirm a positive and moderate effect of the rule of law on economic performance. We also identify spatial, development level, measurement practices, and methodological specifications as the main sources of heterogeneity in the results of the primary studies.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102677"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143848201","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Weapons and influence: Unpacking the impact of Chinese arms exports on the UNGA voting alignment","authors":"Xiaoyu He , Yawen Zheng , Yiwen Chen","doi":"10.1016/j.ejpoleco.2025.102666","DOIUrl":"10.1016/j.ejpoleco.2025.102666","url":null,"abstract":"<div><div>Despite the research exploring factors shaping China’s influence, such causal influence from the perspective of Chinese arms transfers remains to be seen. In this study, we use arms exports and United Nations General Assembly (UNGA) voting data from 140 non-OECD countries between 1990 and 2021 to estimate the causal effect of Chinese arms exports on the recipients’ voting alignments with China in the UNGA, with the voting alignment measured by the proportion of votes that a recipient casts in agreement with China. By using the interaction between the annual exchange rate and cross-country frequencies of receiving arms to construct an instrument, we isolate cleaner exogenous variations in Chinese arms exports. The 2SLS estimates reveal that Chinese arms exports lead to a significant increase in the share of votes cast in favor of China. We also offer plausible explanations for our findings, suggesting that arms recipients may be incentivized to align with China due to the strategic necessity of maintaining their ruling authority and the long-term dependence on Chinese arms supplies.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102666"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143799970","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Starting young: How age limits shape political participation","authors":"Chloe Nibourel , Mattias Folkestad","doi":"10.1016/j.ejpoleco.2025.102672","DOIUrl":"10.1016/j.ejpoleco.2025.102672","url":null,"abstract":"<div><div>Using rich data on Swedish politicians, this paper documents the importance of the first experience of an election on future political participation. A difference-in-discontinuity design, based on the interaction between the month of birth and the timing of elections, allows us to compare the behavior of individuals who can vote and run for office in an election for the second time to individuals of similar age who participate for the first time. We find that, while turnout rates of both groups remain the same, more demanding measures of political engagement, such as running for office and being elected, rise by 10%–14% and 60%–70%, respectively, with the second participation. We discuss the role of parties’ screening in generating these results. We then explore the consequences of lowering the minimum age limit to 16 years old on the age profiles of politicians.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102672"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143881845","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Social mobility and political stability","authors":"Weicheng Lyu","doi":"10.1016/j.ejpoleco.2025.102665","DOIUrl":"10.1016/j.ejpoleco.2025.102665","url":null,"abstract":"<div><div>This paper investigates the occurrence of revolutions in an economy consisting of elites and ordinary citizens. In the economy, elites obtain a disproportionate share of income and maintain their children’s status within the elite class by nepotism. Meanwhile, nepotism obstructs the path for capable individuals to enter the elite class, thereby enhancing the citizens’ relative advantage in capable manpower. In response, citizens may resort to revolutions for a larger share of national income. As the citizens’ relative advantage rises, the difficulty of launching a revolution declines; once it reaches some threshold, a revolution occurs. However, social mobility imposes institutional constraints on nepotism, thus playing a pivotal role in determining the occurrence of revolutions. In this context, we offer an explanation for the periodicity of dynasties and propose an optimal scheme to increase social mobility and prevent revolutions.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102665"},"PeriodicalIF":2.3,"publicationDate":"2025-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143828955","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Do large, sustained economic freedom reforms hurt or improve women's economic rights?","authors":"Tibor Rutar","doi":"10.1016/j.ejpoleco.2025.102671","DOIUrl":"10.1016/j.ejpoleco.2025.102671","url":null,"abstract":"<div><div>Does economic freedom come at the expense of women's economic rights, or does it instead help improve them? Presently, there are almost no studies investigating this issue, and what evidence exists is mostly correlational. This paper presents findings from matching analyses with the explicit aim of addressing the likely endogenous relationship between economic freedom and respect for women's economic rights. Using the latest data (up to 2022), estimates from matching methods, as well as supplementary regressions based on conditional mixed-processes, all point to economic freedom having an improving effect. Two components of economic freedom – sound money and freedom of international trade – seem most likely to drive the aggregate result. The uncovered positive aggregate effect is robust to an extensive set of control variables, tweaks in the operationalization of treatment, and varying the post-treatment period.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102671"},"PeriodicalIF":2.3,"publicationDate":"2025-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143715156","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Random walks into democracy and back: The case against causal explanations of democratization","authors":"Thomas Apolte","doi":"10.1016/j.ejpoleco.2025.102667","DOIUrl":"10.1016/j.ejpoleco.2025.102667","url":null,"abstract":"<div><div>Due to the complexity of historical processes that have led into sustainable democracy, determining generally applicable theories of democratization without violating standards of modern methodology is difficult if not impossible. Hence, we follow an alternative avenue by distinguishing singular democratization events from the politico-institutional soil on which they fall. We represent the latter by the type of loyalty on which government officials coordinate in cases of loyalty conflicts: either to other government officials; or to the rules of the underlying power-sharing arrangement. We embed our results in a dynamic framework and then run a number of simulations that reconstruct possible historical paths into and out of (sustainable) democracy. We demonstrate that the evolution of sustainable democracy, but also its demise, may evolve out of a purely random walk, i.e. a sequence of serially — although not necessarily spatially — uncorrelated historical events, rather than out of any identifiable and generalizable causal driver.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"87 ","pages":"Article 102667"},"PeriodicalIF":2.3,"publicationDate":"2025-03-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143706341","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}