Bachelor 2021/2022

Рolitical Economy

Type: Elective course (Economics)

Area of studies: Economics

Delivered by: Department of Theoretical Economics

Where: Faculty of Economic Sciences

When: 4 year, 3 module

Mode of studies: offline

Open to: students of all HSE University campuses

Instructors: Kemal Kivanc Akoz, Cemal Eren Arbatli

Language: English

ECTS credits: 3

Contact hours: 36

Course Syllabus

Abstract

Well-functioning economic institutions and sound economic policies lead to better economic performance. Yet, these institutions and policies are not determined in a vacuum. They are affected by and co-evolve with political and legal institutions. Therefore, it's of utmost importance to understand how policy decisions are made, what governs the incentives and constraints of policymakers and how con icts over these decisions are resolved. Political economics is a eld of study devoted to the analysis of political institutions and decision making using the analytical and empirical approaches employed in economics (i.e. rational-choice theory, game-theory, econometrics). This course reviews key contributions in the eld of political economics, both theoretical and empirical. First, we will focus on studies that illustrate the key approaches in the study of democratic politics, elections, and policy choice. Then we will delve into dierent forms of non-electoral political bargaining. In this part of the course, we will study the broader context in which political and economic decisions are made. In other words, we will learn how political institutions matter for economic performance by setting the playing eld for economic interactions and in uencing equilibrium policy choices. We will see a formal framework to explain why some nations experience successful democratic transitions while others fail to do so. Finally, we will also get acquainted with some of the main issues in non-electoral politics such as civil conicts, corruption and factors in uencing state capacity as another determinant of economic and political outcomes.

Learning Objectives

• to get acquainted with some of the main issues in non-electoral politics such as civil conflicts, corruption and factors influencing state capacity as another determinant of economic and political outcomes

Expected Learning Outcomes

• understand how policy decisions are made, what governs the incentives and constraints of policymakers and how conflicts over these decisions are resolved

Course Contents

• Section 1. Introduction to Political Economy
• Section 2. Electoral politics. (a) Voting and Aggregation: Arrow's Impossibility Theorem, Condorcet Rule, Majoritarian Rule and its implications (Median-Voter theorem, redistributive taxation).
• Section 2. (b) Electoral Competition, i. Policy Platforms: Downsian Policy Convergence Theorem, and non-convergence.
• Section 2. (b) ii. Election Campaigns, Media and Incumbency
• Section 2. (b) iii. Lobbying
• Section 2. (b) iv. Vote buying, electoral fraud and voter intimidation
• Section 3. Public Policy. (a) Policy under the shadow of re-election: i. Political accountability
• Section 3. (a). ii. Targeted public good provision
• Section 3. (a). iii. White Elephants
• Section 3. (a). iv. Electoral Cycles and Commitment
• Section 3. (b) Composition and Quality of Politicians
• Section 3. (c) Corruption
• Section 4. Non-Electoral Political Bargaining. (a) Political Institutions. i. Political rule as coalitions
• Section 4. (a). ii. Political transitions
• Section 4. (a). iii. State capacity
• Section 4. (b) Civil Wars and Ethnic Con ict

Assessment Elements

• 2 problem sets
  The goal of the problem sets is to make sure you understand and are able to work with modied versions of some of the canonical models we will be discussing during lectures. Unless stated otherwise, problem sets will be due in one week from the day they are assigned. Each student should submit his/her own work. Group submissions are not allowed, and identical submissions or answers that look highly similar will be heavily penalized.
• Long take-home essay
  The long take-home essay will ask you to take a stance (defend a position) on a particular open ended question or debate in the literature based on existing studies that are relevant to this debate. It will be your responsibility to survey the existing literature beyond what is included in your reading list. You will be asked to summarize and evaluate the arguments and evidence from both sides of the debate and explain why you nd one line of argument more convincing than the other.
• Attendance and Participation
  We will be taking attendance every lecture, and attendance will constitute 10% of your course grade. We will also reward active class participation on a regular basis at the end of the course by rounding their grade on the 0-10 scale upwards in case the student is close to the border between two grades.

Interim Assessment

• 2021/2022 3rd module

Bibliography

Recommended Core Bibliography

• Lee, D. S., Moretti, E., & Butler, M. J. (2004). Do Voters Affect or Elect Policies? Evidence from the U. S. House. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.F29E47CE

Recommended Additional Bibliography

• Raghabendra Chattopadhyay, & Esther Duflo. (2004). Women as policy makers: Evidence from a randomized policy experiment in india. Framed Field Experiments. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.feb.framed.00224