ALEJANDRO SAPORITI. COURSE OUTLINE. This course is designed to
introduce you to recent research in the field of Political. Economy. Political
economics is ...
Department of Economics Universidad del CEMA
TOPICS ON POLITICAL ECONOMICS ALEJANDRO SAPORITI COURSE OUTLINE This course is designed to introduce you to recent research in the field of Political Economy. Political economics is a relatively young field of study that has been attracting many economists in the last few years. Broadly speaking, political economy can be divided into two sub fields. The first concerns itself with relaxing the social planner assumption in the analysis of economics and specifically in economic policy. The second sub field is concerned with a better understanding of political institutions and political incentives. The course focuses mainly on the latter research agenda. CONTENT AND READINGS
1. INTRODUCTION TOPICS: Normative and positive approach to economic policy. Ex-ante and ex-post heterogeneity of interests. Political economy, social choice, game theory and public choice. -
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Austen-Smith, D. and J. Banks. (1998). ‘Social Choice Theory, Game Theory and Positive Political Theory’. In N.W. Polsby [Eds.], Annual Review of Political Science, Palo Alto: Annual Reviews. Dixit, A. (1996). The Making of Economic Policy. MIT Press. Chapter 1. Drazen, A. (2000). Political Economy in Macroeconomics. Princeton University Press. Chapters 1, 3. Persson, T. and G. Tabellini. (2000). Political Economics. The MIT Press. Chapter 1.
2. RESTRICTED PREFERENCES TOPICS: Majority cycling; Condorcet’s Paradox; Arrow’s theorem. Single-peakedness: the median voter theorem. Order-restriction: the representative voter theorem. Strategy-proof results. -
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Austen-Smith, D. and J. Banks. (1998). Positive Political Theory I. Ann Arbor: University of Michigan Press. Chapter 4. Persson, T. and G. Tabellini. (2000). Political Economics. The MIT Press. Chapter 2. Sprumont, Y. (1995). ‘Strategyproof collective choice in economic and political environments’. Canadian Journal of Economics, 1: 68-107.
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3. POLITICAL INSTITUTIONS TOPICS: Multidimensional politics and McKelvey’s Chaos Theorem. Structure induced equilibrium. Institutional bias: the agenda-setter model. Stylized facts. -
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Moser, P. (1999). ‘The Impact of Legislative Institutions on Public Policy: A Survey’. European Journal of Political Economy, 15: 1-33. Rosenthal, H. (1990). ‘The Setter Model’. In: J. Enelow y M. Hinich (eds.), Advances in the Spatial Theory of Voting. Cambridge University Press. Persson, T. and G. Tabellini. (2000). Political Economics. The MIT Press. Chapter 2. Persson, T. and G. Tabellini. (2001). ‘Political Institutions and Policy Outcomes: What are the Stylized Facts?’ IGIER Working Paper.
4. DYNAMIC POLITICS:
THE TIME-CONSISTENCY PROBLEM
TOPICS: Capital taxation. Time inconsistency as a conflict of interests. The Barro-Gordon model. Solutions: Delegation of authority: Central bank independence; Credibility and reputation: models of mimicking and signaling. Credibility of policies vs. credibility of policy-makers. -
Backus, D. and J. Driffill. (1985). ‘Inflation and Reputation’. American Economic Review, 75:530538. Barro, R. J. and D. B. Gordon. (1983). ‘A Positive Theory of Monetary Policy in a Natural Rate Model’. Journal of Political Economy, 91: 589-610. Drazen, A. and P. Masson. (1994). ‘Credibility of Policies versus Credibility of Policy-makers’. Quarterly Journal of Economics, 109: 735-754. Drazen, A. (2000). Political Economy in Macroeconomics. Chapters 4, 5, 6. Rogoff, K. (1985). ‘The Optimal Degree of Commitment to an Intermediate Monetary Target’. Quaterly Journal of Economics, 100: 1169-1190. Rogoff, K. (1989). ‘Reputation, Coordination and Monetary Policy’. In: Barro, Modern Business Cycle Theory. Cambridge: Harvard University Press. Vickers, J. (1986). ‘Signaling in a Model of Monetary Policy with Incomplete Information’. Oxford Economic Papers, 38: 443-455.
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