Legal uncertainty and its consequences: A natural language processing approach

Sosa Andrés, Maximiliano

Abstract: Unforeseeable changes in the legal environment are a source of legal uncertainty, which theory suggests is negative for firms' investment decisions. Yet, empirical evidence is limited. One reason is the difficulty of producing comparable measures across time and regions. This paper develops a new index of legal uncertainty, by extracting the information content in all laws approved in a country and year to calculate the unforecastable component in legal content. I present how the index is constructed, test its robustness and compare it with available measures of institutional quality. I show great variability in legal uncertainty across countries and institutional frameworks. I then apply the index to provide evidence on the consequences of legal uncertainty on investment and employment. Results show that, in the event of an increase in legal uncertainty, firms react by slowing down investments and laying off workers.

Friends and foes in the UN: The impact of political alignment on human rights policy

Sosa Andrés, M. and Christensen, J.D.

Abstract: Every year the 193 members of the United Nations make recommendations and observations to and about other member states with respect to human rights under the Universal Periodic Review (UPR). On what basis these are made or if they might be politically motivated is unclear. We analyze if the political ideology of the current government drives international human rights policy. By combining UPR records with the rich data from the Database of Political Institutions we implement a Regression Discontinuity Design to determine if shared ideology between two country governments impacts human rights policy. By using text-mining techniques we analyze the sentiment of messages and characterize them as positive or negative. We provide robust evidence that ideologically aligned governments send more positive and praising messages compared to non-aligned ones.

Divided government and polarization: Regression-discontinuity evidence from US states

Repetto, L. and Sosa Andrés, M.

Abstract: This paper studies the effect of having a divided government on political polarization. Using data on electoral and legislative outcomes for US states over 1950-2018 and a regression discontinuity design, we start by showing that Republican state legislators are substantially more polarized when they serve in a divided government. Instead, we find little or no effect for Democrats. Additionally, having both chambers against cause governors of both parties to veto more bills, but with no impact on actual policy implementation as measured by a policy liberalism score. Finally, we study the effect of divided government on future electoral performance and find very limited impact for both parties.

An uncertain world: Predicting expendidature patterns using news papers

Christensen, J.D. and Sosa Andrés, M. (work in progress)

Superpower Rivalry & Proxy Civil War: Empirically Assessing the Conflict Risk of Surrogate Regimes During the Cold War, 1946-1989

Vadlamannati , K.C., Sosa Andrés, M. and de Soysa , I. (working paper)

Abstract: The bulk of social science theories explaining civil war focus on endogenous factors, generally ignoring the systemic effects of superpower rivalry during the Cold War. This study directly estimates US and Soviet rivalry by assessing the impact of CIA and KGB support to surrogates in proxy wars. Our results show that CIA support increases the risk of civil war, results that are robust to several alternative explanations and bias from endogeneity. It seems that ignoring systemic factors, particularly the interests of great powers only partially explain why some civil wars are more feasible than others. Proxy wars due to great power rivalry also possibly explain the bulk of current civil wars, and their lethality might be explained as the lack of restraint that the superpowers had to show to avoid a direct war between them. These results suggest that theories aimed at understanding why endogenous country conditions make civil war more feasible focus also on exogenous factors, such as great power rivalry given how support from powerful external actors make fighting more feasible. The question of the “proxiness” also potentially challenges notions of commitment and time-inconsistency problems associated with explanations of why agents fail to find less costly bargains compared with continuing the fight.