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Expectations of consumers and investors are drivers of consumption and investment, and consequently the business cycle. In this paper, we study whether these expectations, as proxied by economic sentiment indicators, are affected by the political environment. First, we study the impact of political uncertainty related to elections and weak governments. Surprisingly, we do not find evidence for a negative effect of uncertainty on consumer and business sentiment. On the contrary, our results suggest that consumer confidence even increases in the forefront of elections. This increase is most pronounced in situations where consumers perceive the economic situation as bad, which suggests that positive expectation effects outweigh the negative uncertainty effects. Second, we study the effect of the political preferences of governments on economic sentiment. As measure of political preferences, we use data on party preferences derived from the content analysis of election manifestos. Our results suggest that during the reign of governments whose platforms support economic orthodox policies, such as fiscal consolidations, consumer and, to a lesser extent, business is subdued. Conversely, consumer confidence increases when governments focus on the strengthening of institutions, whereas business sentiment reacts positively to governments highlighting technology and infrastructure.

Regional transfers are assumed to have an impact on the public opinion towards the benefactor, but empirical evidence is still scarce. In this paper we test this hypothesis for the structural funds of the European Union (EU) by combining detailed data on regional transfers with public opinion surveys. A positive impact of transfers on public support for the EU can be confirmed. Moreover, we scrutinize the role of awareness of being a recipient of funds in this process. In particular, we find that the impact of the amount of transfers on the individual's awareness is heterogenous and particularly depends on education. Finally, we show that the type of information source which arouses the citizen's awareness of the transfers affects the impact on his opinion.

In this paper, a new approach to disclose the impact of politics on economic growth is presented: we use data derived from content analysis of party manifestos as measures of party preferences. In a panel of 23 OECD countries, we detect a positive impact of party support for various market-liberal policies on economic performance. In particular, we show that parties which were more concerned with market interventions and - to a lesser extent - welfare state policies impacted on growth negatively; those which proposed incentives for business as well as technology and infrastructure had a positive impact. Moreover, the robustness of the results is demonstrated in a model averaging framework.

Die Kohäsionspolitik der Europäischen Union (EU) dient vornehmlich dazu, regionale Disparitäten innerhalb der Union zu reduzieren. Neben den damit verbundenen Wachstumswirkungen in den geförderten Regionen lässt die politökonomische Theorie jedoch zusätzlich erwarten, dass derartige Regionaltransfers einen positiven Einfluss auf die öffentliche Meinung gegenüber der EU in den finanziell besonders begünstigten Regionen ausüben.

Im Vorfeld einer für die Jahre 2008 und 2009 vorgesehenen Überprüfung des Haushalts der Europäischen Union (EU) wurden Rufe laut, die Finanzierung der EU vom derzeitigen beitragsbasierten System auf eine EU-Steuer umzustellen. Dieser Beitrag stellt die Vor- und Nachteile einer steuerbasierten Finanzierung des EU-Haushalts gegenüber, und untersucht die politische Realisierbarkeit einer EU-Steuer.

Setting minimum tax rates is a well discussed way of mitigating pressure from tax competition. This paper investigates which motives shape the support for a minimum corporate tax among politicians. We make use of a unique data base: a survey among members of the European parliament. Our results confirm that the politicians' ideology as well as individual characteristics such as educational background exert a major influence. Moreover, several predictions regarding national interests are derived from various standard tax competition models. These hypotheses are partly supported by the data; in particular, different national preferences towards social equality shape the support. A comparison with survey results from the German Bundestag reveals that German politicians on the national level do not show different attitudes towards tax rate harmonization. [Copyright Elsevier B.V.]

Studies of spatial policy interdependence in (local) public policies usually concentrate on the relations between jurisdictions within a single analysed region, and disregard possible extra-regional effects. However, the theoretical spatial statistics literature shows that biased estimates might emerge if spatial interactions extend beyond the boundaries of the available data (i.e., the boundary value problem). This paper empirically assesses the practical relevance of this concern by studying German local politicians' assessments of their jurisdictions' main competitors in the struggle to attract firms. We find that location near a border significantly undermines politicians' perception that the fiercest competitive pressure derives from jurisdictions within their own state. This effect sets in about 20km (10.2km) from a national (international) border. These results indicate that nearest municipalities perceive each other as competitors regardless of the state or country where they are located, which has important implications for estimating spatial dependence models.