This course offers a comprehensive overview of the field of political economics. We will introduce game theoretic models that will be used to understand how politicians’ motivations affect public-policy decisions. The course will start with the introduction to the toolbox of political economics. It will then apply these tools to important topics in political economy: redistribution, comparative politics, and debt. In the second part of the course, particular emphasis will be given to the interaction between political incentives and macroeconomic policies.
Chapter 1: Tools of political economics (Electoral competition, Agency Models of Election, Partisan Politicians, Legislative Bargaining, Probabilistic Voting, Interest-groups)
Chapter 2: Redistributive politics and Public Good Provision (Median Voter Models, Divide the dollar game)
Chapter 3: Comparative Politics (Electoral Rules and Electoral Competition)
Chapter 4: Dynamic Political Economy (Fiscal and Monetary Policy, Government Debt, Legal and Fiscal Capacity, Welfare State Dynamics)
– Acemoglu D. and J. Robinson, 2006. Economic origins of dictatorship and democracy. Cambridge University Press.
– Austen-Smith David and Jeffrey Banks 2005 Positive Political Theory I and II University of Michigan Press
– Besley, T., 2006. Principled Agents Oxford University Press.
– Besley, T and T. Persson, 2011. Pillars of Prosperity. Princeton University Press.
– Grossman G. and E. Helpman, 2001. Special interest politics. MIT Press
– Drazen, A., 2000. Political Economy in Macroeconomics. Princeton University Press.
– Persson, T. and G. Tabellini, 2000. Political Economics: Explaining Economic Policy. MIT Press.
– Persson, T. and G. Tabellini, 2003. The economic effects of constitutions. MIT Press.