Syllabus
CONTENTS
Readings: The more stars, the more important (*** essential, ** strongly recommended, * recommended). If you don't find readings on the course website, try Google Scholar or CERGE-EI library (www.cerge-ei.cz). You should have at least skimmed the relevant readings before the lecture and seminar. 1. Pivotal voter. Does a majority policy ever exist? Who dictates economic policy: centrist or unbiased citizens? Probabilistic voting. Party-unity Nash equilibrium. Testing pivotal voter vs. probabilistic voting: energy taxation in the US.
*** PT 19-25, 28-38
** Grossman & Helpman (2001, 41-63, 87-99)
*** Cremer et al. (2007)
** JEB064 lecture note 01
* Besley lecture notes; also in Besley (2006)
* Romer, Rosenthal (1979) 2. Redistribution and the pivotal voter. Classic model of redistribution (Meltzer and Richard). Does redistribution maximize current income of centrist voters? Does higher inequality increase redistribution? Mixed evidence. Dynamic redistribution (Benabou). Citizen candidates and Director Law: ends against the middle class. Double pivot: aging median voter and pension reform.
*** PT 117-123
*** Mello & Tiongson (2006)
** Borck (2007)
* Razin, Sadka (2004)
* Galasso (2006)
* Thomson (2008)
* Milanovic (2000) 3. Probabilistic voting, comparative politics, and public finance. Do electoral rules affect composition and the size of public spending? How about other political institutions, such as presidency? Proportional vs. majoritarian elections. Representative vs. direct democracy. Term limits. Evidence. Probabilistic voting and the differences in international corporate governance.
*** PT 205-220
*** Besley & Persson (2006)
*** Pagano, Volpin (2005)
** Persson & Tabellini (2004a)
* Grossman & Helpman (2001, 64-74)
* Persson & Tabellini (2003, Chap. 1)
* Persson & Tabellini (2004b) 4. Lobbying. Menu contributions (common agency). Is decentralized power more or less prone to lobbying? Trade policy and "protection for sale". Strategic information transmission. Symmetric and asymmetric contests for a fixed rent: Are large groups exploited by small groups? Can increase in natural resource decrease growth (Dutch disease)?
*** PT 58-63, 172-175, 180-185
*** Corchón (2007)
* Osborne (2000, 343-350)
* Grossman & Helpman (2001, Ch. 1, 4, 5, 7, 9, 8, 9, 10) 5. Dynamics of fiscal policy. The origins of dynamic common pool problem: fragmentation under certainty and electoral uncertainty. Strategic public debt. Delayed stabilizations: war of attrition.
*** PT (2000) 6. Legislative bargaining. Congressional-presidential regime vs. parliamentary regime.
*** PT (2000) 7. Endogenous barriers to growth. Income inequality, and conflicts over public investments. Instability and public investments. Can government support to investments explain lack of convergence to technology frontier?
*** PT (2000)
*** Ghate (2008)
* Acemoglu et al. (2006) 8. International. Voting power. Can we explain EU budget by voting power? Why Lisbon fails? Lobbying on the international level. A positive explanation of the EU enlargement. Hold-up problem and bargaining during a union enlargement. Political economy of exchange rates.
*** Widgren, Kauppi (2004)
*** Ruta (2009)
** Kauppi, Widgren (2007)
** Brou, Ruta
** Broz, Frieden (2006) in OxfHPE
* Wallner (2000) 9. Carreer concerns. Political business cycle as a moral hazard. Evidence of PBC for CEEC. Political cycle in the structure of spending. Wasteful spending as preelectoral signaling. Recent advances in carreer concerns modelling.
*** PT
** Brenden, Drazen (2008)
** Franzese, Jusko (2006) in OxfHPE
* Dewatripont, Seabright (2006)
Bear in mind that syllabus is subject to ongoing updates and revisions. I'll be posting all updates only on the IES course homepage.
Annotation
This course examines economic policies as an outcome of strategic interactions between politicians, voters, businessmen, and special interest groups. The course helps to understand the interplay between politics and economy and thereby explain cross-country variation in policies and economic performance.
The main goal is to introduce and show applications of key concepts of modern political economics: pivotal voters, probabilistic voting, lobbying as signalling, lobbying as a contest, common agency lobbying, legislative bargaining, dynamic political economy, international negotiations, and pre-electoral carreer concerns. Applications cover a broad range of topics: energy taxation, transfer payments, pension reform, fiscal policy, regional policy, corporate governance, public investments, R&D policy, and policies of international unions.