Advertisement

Public Choice

, Volume 175, Issue 3–4, pp 303–323 | Cite as

Shades of red and blue: government ideology and sustainable development

  • Toke S. Aidt
  • Vitor CastroEmail author
  • Rodrigo Martins
Article
  • 361 Downloads

Abstract

We study the effect of government ideology on sustainable development, measured as investment in genuine wealth, in a dynamic panel of 79 countries between 1981 and 2013. We find robust and statistically significant evidence that genuine investment grows faster under right-wing governments than under left-wing or center governments. In contrast, we find no indication of opportunistic cycles.

Keywords

Sustainable development Government ideology Political cycles Genuine investment 

JEL Classification

C23 D72 I31 O15 

Notes

Acknowledgements

The authors acknowledge the helpful comments and suggestions from the participants at the 23rd International Academic Conference of the International Institute of Social and Economic Sciences, Venice International University, Venice, Italy, 27–30 April 2016; the participants at the 10th Annual Meeting of the Portuguese Economic Journal, University of Coimbra, Portugal, 1–3 July 2016; and the participants at the 2017 annual Meeting of the European Public Choice Society, Central European University, Budapest, Hungary, 19–22 April. Vitor Castro also wishes to thank the financial support provided by the Portuguese Foundation for Science and Technology under the research grant SFRH/BSAB/113588/2015 (partially funded by COMPTE, QREN and FEDER).

Supplementary material

11127_2018_536_MOESM1_ESM.docx (84 kb)
Supplementary material 1 (DOCX 83 kb)
11127_2018_536_MOESM2_ESM.dta (950 kb)
Supplementary material 2 (DTA 951 kb)
11127_2018_536_MOESM3_ESM.do (5 kb)
Supplementary material 3 (DO 6 kb)

References

  1. Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The colonial origins of development: An empirical investigation. American Economic Review, 91(5), 1369–1401.CrossRefGoogle Scholar
  2. Acemoglu, D., Naidu, S., Restrepo, P., & Robinson, J. A. (2018). Democracy does cause growth. Journal of Political Economy (in press).Google Scholar
  3. Aidt, T. S. (2009). Corruption, institutions, and economic development. Oxford Review of Economic Policy, 25(2), 271–291.CrossRefGoogle Scholar
  4. Aidt, T. S. (2011). Corruption and sustainable development. In S. Rose-Ackerman & T. Soreide (Eds.), International handbook on the economics of corruption (Vol. II, Ch. 1). Cheltenham, UK: Edward Elgar Publishing.Google Scholar
  5. Aidt, T. S., & Mooney, G. (2014). Voting suffrage and the political budget cycle: Evidence from the London Metropolitan Boroughs 1902–1937. Journal of Public Economics, 112, 53–71.CrossRefGoogle Scholar
  6. Alesina, A. (1987). Macroeconomic policy in a two-party system as a repeated game. Quarterly Journal of Economics, 102, 651–678.CrossRefGoogle Scholar
  7. Altonji, J. G., Taber, C. R., & Todd, E. E. (2005). Selection on observed and unobserved variables: Assessing the effectiveness of Catholic schools. Journal of Political Economy, 113(1), 151–184.CrossRefGoogle Scholar
  8. Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies, 58, 277–297.CrossRefGoogle Scholar
  9. Arellano, M., & Bover, S. (1995). Another look at the instrumental variable estimation of error components models. Journal of Econometrics, 68, 29–51.CrossRefGoogle Scholar
  10. Arrow, K., Dasgupta, P., Goulder, L., Daily, G., Ehrlich, P., Heal, G., et al. (2004). Are we consuming too much? Journal of Economic Perspectives, 18(3), 147–172.CrossRefGoogle Scholar
  11. Arrow, K., Dasgupta, P., & Mäler, K. (2003). The genuine savings criterion and the value of population. Economic Theory, 21(2), 217–225.CrossRefGoogle Scholar
  12. Asheim, G. (2000). Green national accounting: Why and how? Environment and Development Economics, 5, 25–48.CrossRefGoogle Scholar
  13. Atkinson, G., & Hamilton, K. (2003). Savings, growth and the Resource Curse Hypothesis. World Development, 31(11), 1793–1807.CrossRefGoogle Scholar
  14. Baltagi, B. (2008). Econometric analysis of panel data (4th ed.). Chichester, UK: John Wiley & Sons Ltd.Google Scholar
  15. Bjørnskov, C. (2005). Does political ideology affect economic growth? Public Choice, 123(2), 133–146.CrossRefGoogle Scholar
  16. Bjørnskov, C. (2008). The growth-inequality association: Government ideology matters. Journal of Development Economics, 87(2), 300–308.CrossRefGoogle Scholar
  17. Bjørnskov, C., & Potrafke, N. (2012). Political ideology and economic freedom across Canadian provinces. Eastern Economic Journal, 38, 143–166.CrossRefGoogle Scholar
  18. Bjørnskov, C., & Potrafke, N. (2013). The size and scope of government in the US states: Does party ideology matter? International Tax and Public Finance, 20, 687–714.CrossRefGoogle Scholar
  19. Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115–143.CrossRefGoogle Scholar
  20. Bruno, G. (2005a). Estimation and inference in dynamic unbalanced panel-data models with a small number of individuals. Stata Journal, 5(4), 473–500.Google Scholar
  21. Bruno, G. (2005b). Approximating the bias of the LSDV estimator for dynamic unbalanced panel data models. Economics Letters, 87(3), 361–366.CrossRefGoogle Scholar
  22. Dasgupta, P. (2001). Human well-being and the natural environment. Oxford: Oxford University Press.CrossRefGoogle Scholar
  23. Dasgupta, P. (2010). The place of nature in economic development. In D. Rodrik & M. Rosenzweig (Eds.), Handbook of development economics (Vol. 5, pp. 4977–5047). Amsterdam: North Holland.CrossRefGoogle Scholar
  24. Dasgupta, P., & Mäler, K. (2000). Net national product, wealth, and social well-being. Environment and Development Economics, 5(1), 69–93.CrossRefGoogle Scholar
  25. Database of Political Institutions (several years). World Bank (http://www.worldbank.org).
  26. Doornik, J., Arellano, M., & Bond, S. (2002). Panel data estimation using DPD for OX: Manuscript. Oxford: Oxford University.Google Scholar
  27. Dubois, E. (2016). Political business cycles 40 years after Nordhaus. Public Choice, 166(1–2), 235–259.CrossRefGoogle Scholar
  28. Fleurbaey, M. (2009). Beyond GDP: The quest for a measure of social welfare. Journal of Economic Literature, 474, 1029–1075.CrossRefGoogle Scholar
  29. Folke, O. (2014). Shades of brown and green: Party effects in proportional election systems. Journal of the European Economic Association, 12(5), 1361–1395.CrossRefGoogle Scholar
  30. Frederiksson, P. G., Wang, L., & Warren, P. L. (2013). Party politics, governors and economic policy. Southern Economic Journal, 80(1), 106–126.CrossRefGoogle Scholar
  31. Gründler, K., & Krieger, T. (2016). Democracy and growth: Evidence from a machine learning indicator. European Journal of Political Economy, 45, 85–107.CrossRefGoogle Scholar
  32. Guerriero, C. (2016). Endogenous legal traditions. International Review of Law and Economics, 46, 49–69.CrossRefGoogle Scholar
  33. Gundlach, E., & Paldam, M. (2009). A farewell to critical junctures: Sorting out long-run causality of income and democracy. European Journal of Political Economy, 25, 340–354.CrossRefGoogle Scholar
  34. Hamilton, K., & Clemens, M. (1999). Genuine savings rates in developing countries. World Bank Economic Review, 13(2), 333–356.CrossRefGoogle Scholar
  35. Hibbs, D. A. (1977). Political parties and macroeconomic policy. American Political Science Review, 71, 1467–1487.CrossRefGoogle Scholar
  36. Hibbs, D. A. (1987). The american political economy: Macroeconomics and electoral politics in the United States. Cambridge, MA: Harvard University Press.Google Scholar
  37. Hibbs, D. A. (2006). Voting and the macroeconomy. In B. R. Weingast & D. A. Wittman (Eds.), The Oxford handbook of political economy (pp. 565–586). Oxford: Oxford University Press.Google Scholar
  38. Hicks, J. (1940). The valuation of social income. Economica, 7, 105–124.CrossRefGoogle Scholar
  39. Imbeau, L., Pétry, F., & Lamari, M. (2001). Left-right party ideology and government policies: A meta-analysis. European Journal of Political Research, 40(1), 1–29.Google Scholar
  40. Judson, R., & Owen, A. (1999). Estimating dynamic panel data models: A guide for macroeconomists. Economics Letters, 65(1), 9–15.CrossRefGoogle Scholar
  41. Kauder, B., & Potrafke, N. (2013). Government ideology and tuition fee policy: Evidence from the German States. CESifo Economic Studies, 59(4), 628–649.CrossRefGoogle Scholar
  42. Keefer, P. (2012). Database of political institutions: Changes and variable definitions. Development Research Group. Washington DC: The World Bank.Google Scholar
  43. Lamérisa, M., Jong-A-Pin, R., & Garretsen, H. (2018). On the measurement of voter ideology. European Journal of Political Economy.  https://doi.org/10.1016/j.ejpoleco.2018.03.003. in press.Google Scholar
  44. Lawn, P. A. (2003). A theoretical foundation to support the Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI), and other related indexes. Ecological Economics, 44(1), 105–118.CrossRefGoogle Scholar
  45. Moshirian, F., & Wu, Q. (2012). Banking industry volatility and economic growth. Research in International Business and Finance, 26, 428–442.CrossRefGoogle Scholar
  46. Mueller, J. E. (1970). Presidential popularity from Truman to Johnson. American Political Science Review, 64, 18–23.CrossRefGoogle Scholar
  47. Nordhaus, W. D. (1975). The political business cycle. Review of Economic Studies, XLII2, 169–190.CrossRefGoogle Scholar
  48. Oster, E. (2017). Unobservable selection and coefficient stability: Theory and validation. Journal of Business & Economic Statistics.  https://doi.org/10.1080/07350015.2016.1227711. in press.Google Scholar
  49. Pickering, A., & Rockey, J. (2011). Ideology and the growth of government. Review of Economics and Statistics, 93(3), 907–919.CrossRefGoogle Scholar
  50. Pickering, A. C., & Rockey, J. (2013). Ideology and the size of US state government. Public Choice, 156(3–4), 443–465.CrossRefGoogle Scholar
  51. Polity IV project (2013). Individual Country Regime Trends, 1946–2013. (http://www.systemicpeace.org/polity/polity4x.htm).
  52. Potrafke, N. (2010). Does government ideology influence deregulation of product markets? Empirical evidence from OECD countries. Public Choice, 143(1–2), 135–155.CrossRefGoogle Scholar
  53. Potrafke, N. (2017). Partisan politics: The empirical evidence from OECD panel data studies. Journal of Comparative Economics, 45(4), 712–750.CrossRefGoogle Scholar
  54. Reed, W. R. (2006). Democrats, republicans, and taxes: Evidence that political parties matter. Journal of Public Economics, 90(4–5), 725–750.CrossRefGoogle Scholar
  55. Rogoff, K. (1990). Equilibrium political budget cycles. The American Economic Review, 801, 21–36.Google Scholar
  56. Rogoff, K., & Sibert, A. (1988). Elections and macroeconomic policy cycles. Review of Economic Studies, 1, 1–16.CrossRefGoogle Scholar
  57. Roodman, D. (2009a). How to do xtabond2: An introduction to difference and system GMM in Stata. Stata Journal, 9(1), 86–136.Google Scholar
  58. Roodman, D. M. (2009b). A note on the theme of too many instruments. Oxford Bulletin of Economics and Statistics, 71, 135–158.CrossRefGoogle Scholar
  59. Veiga, F., & Veiga, L. (2004). The determinants of vote intentions in Portugal. Public Choice, 118(3–4), 341–364.CrossRefGoogle Scholar
  60. Venard, B. (2013). Institutions, corruption and sustainable development. Economics Bulletin, 33(4), 2545–2562.Google Scholar
  61. World Bank. (2006). Where is the wealth of nations? Measuring capital for the 21st century. Washington, DC: The World Bank.Google Scholar
  62. World Commission. (1997). Our common future. New York: Oxford University Press.Google Scholar
  63. World Development Indicators (several years). Washington DC: World Bank (http://data.worldbank.org/).

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  • Toke S. Aidt
    • 1
  • Vitor Castro
    • 2
    • 3
    Email author
  • Rodrigo Martins
    • 4
    • 5
  1. 1.Faculty of Economics and Jesus CollegeUniversity of CambridgeCambridgeUK
  2. 2.School of Business and EconomicsLoughborough UniversityLoughborough, LeicestershireUK
  3. 3.Economic Policies Research Unit (NIPE)University of MinhoBragaPortugal
  4. 4.Faculty of EconomicsUniversity of CoimbraCoimbraPortugal
  5. 5.Centre for Business and Economic Research (CeBER)CoimbraPortugal

Personalised recommendations