14.770: Introduction to Political Economy
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A POLITICAL THEORY of POPULISM* Daron Acemoglu Georgy Egorov Konstantin Sonin I. Introduction There Has Recently Been a Resurgen
A POLITICAL THEORY OF POPULISM* Daron Acemoglu Georgy Egorov Konstantin Sonin When voters fear that politicians may be influenced or corrupted by the rich elite, signals of integrity are valuable. As a consequence, an honest polit- ician seeking reelection chooses ‘‘populist’’ policies—that is, policies to the left of the median voter—as a way of signaling that he is not beholden to the interests of the right. Politicians that are influenced by right-wing special interests re- Downloaded from spond by choosing moderate or even left-of-center policies. This populist bias of policy is greater when the value of remaining in office is higher for the polit- ician; when there is greater polarization between the policy preferences of the median voter and right-wing special interests; when politicians are perceived as more likely to be corrupt; when there is an intermediate amount of noise in the information that voters receive; when politicians are more forward-looking; and http://qje.oxfordjournals.org/ when there is greater uncertainty about the type of the incumbent. We also show that soft term limits may exacerbate, rather than reduce, the populist bias of policies. JEL Codes: D71, D74. I. Introduction There has recently been a resurgence of ‘‘populist’’ politicians in several developing countries, particularly in Latin America. at MIT Libraries on April 24, 2013 Hugo Cha´vez in Venezuela, the Kirchners in Argentina, Evo Morales in Bolivia, Alan Garcı´a in Peru, and Rafael Correa in Ecuador are some of the examples. The label populist is often -
Rohini Pande
ROHINI PANDE 27 Hillhouse Avenue 203.432.3637(w) PO Box 208269 [email protected] New Haven, CT 06520-8269 https://campuspress.yale.edu/rpande EDUCATION 1999 Ph.D., Economics, London School of Economics 1995 M.Sc. in Economics, London School of Economics (Distinction) 1994 MA in Philosophy, Politics and Economics, Oxford University 1992 BA (Hons.) in Economics, St. Stephens College, Delhi University PROFESSIONAL EXPERIENCE ACADEMIC POSITIONS 2019 – Henry J. Heinz II Professor of Economics, Yale University 2018 – 2019 Rafik Hariri Professor of International Political Economy, Harvard Kennedy School, Harvard University 2006 – 2017 Mohammed Kamal Professor of Public Policy, Harvard Kennedy School, Harvard University 2005 – 2006 Associate Professor of Economics, Yale University 2003 – 2005 Assistant Professor of Economics, Yale University 1999 – 2003 Assistant Professor of Economics, Columbia University VISITING POSITIONS April 2018 Ta-Chung Liu Distinguished Visitor at Becker Friedman Institute, UChicago Spring 2017 Visiting Professor of Economics, University of Pompeu Fabra and Stanford Fall 2010 Visiting Professor of Economics, London School of Economics Spring 2006 Visiting Associate Professor of Economics, University of California, Berkeley Fall 2005 Visiting Associate Professor of Economics, Columbia University 2002 – 2003 Visiting Assistant Professor of Economics, MIT CURRENT PROFESSIONAL ACTIVITIES AND SERVICES 2019 – Director, Economic Growth Center Yale University 2019 – Co-editor, American Economic Review: Insights 2014 – IZA -
The Killing Game: a Theory of Non-Democratic Succession
Research in Economics 69 (2015) 398–411 Contents lists available at ScienceDirect Research in Economics journal homepage: www.elsevier.com/locate/rie The killing game: A theory of non-democratic succession Georgy Egorov a,n, Konstantin Sonin b,c a Northwestern University, United States b University of Chicago, United States c Higher School of Economics, Moscow, Russia article info abstract Article history: The winner of a battle for a throne can either execute or spare the loser; if the loser is Received 13 April 2015 spared, he contends the throne in the next period. Executing the losing contender gives Accepted 26 May 2015 the winner a chance to rule uncontested for a while, but then his life is at risk if he loses to Available online 16 July 2015 some future contender who might be, in equilibrium, too frightened to spare him. The Keywords: trade-off is analyzed within a dynamic complete information game, with, potentially, an Non-democracy infinite number of long-term players. In an equilibrium, decisions to execute predecessors Succession depend on the predecessors’ history of executions. With a dynastic rule in place, Execution incentives to kill the predecessor are much higher than in non-hereditary dictatorships. Reputation The historical illustration for our analysis contains a discussion of post-World War II Markov perfect equilibrium politics of execution of deposed leaders and detailed discussion of non-hereditary military dictatorships in Venezuela in 1830–1964, which witnessed dozens of comebacks and no single political execution. & 2015 Published by Elsevier Ltd. on behalf of University of Venice. “Who disagrees with our leadership, will get a spit into his face, a blow onto his chin, and, if necessary, a bullet into his head”. -
World Welfare Is Rising: Estimation Using Nonparametric Bounds on Welfare Measures
Federal Reserve Bank of New York Staff Reports World Welfare Is Rising: Estimation Using Nonparametric Bounds on Welfare Measures Maxim L. Pinkovskiy Staff Report No. 662 December 2013 This paper presents preliminary findings and is being distributed to economists and other interested readers solely to stimulate discussion and elicit comments. The views expressed in this paper are those of the author and are not necessarily reflective of views at the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author. World Welfare Is Rising: Estimation Using Nonparametric Bounds on Welfare Measures Maxim L. Pinkovskiy Federal Reserve Bank of New York Staff Reports, no. 662 December 2013 JEL classification: I31, C02 Abstract I take a new approach to measuring world inequality and welfare over time by constructing robust bounds for these series instead of imposing parametric assumptions to compute point estimates. I derive sharp bounds on the Atkinson inequality index that are valid for any underlying distribution of income conditional on given fractile shares and the Gini coefficient. While the bounds are too wide to reject the hypothesis that world inequality may have risen, I show that world welfare rose unambiguously between 1970 and 2006. This conclusion is valid for alternative methods of dealing with countries and years with missing surveys, alternative survey harmonization procedures, and alternative GDP series, or if the inequality surveys used systematically underreport the income of the very rich or suffer from nonresponse bias. Key words: world income distribution, inequality and welfare measures, nonparametric bounds _________________ Pinkovskiy: Federal Reserve Bank of New York (e-mail: [email protected]). -
Political Economy of Redistribution
DISCUSSION PAPER SERIES DP11285 POLITICAL ECONOMY OF REDISTRIBUTION Daniel Diermeier, Georgy Egorov and Konstantin Sonin DEVELOPMENT ECONOMICS and PUBLIC ECONOMICS ISSN 0265-8003 POLITICAL ECONOMY OF REDISTRIBUTION Daniel Diermeier, Georgy Egorov and Konstantin Sonin Discussion Paper 11285 Published 18 May 2016 Submitted 18 May 2016 Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK Tel: +44 (0)20 7183 8801 www.cepr.org This Discussion Paper is issued under the auspices of the Centre’s research programme in DEVELOPMENT ECONOMICS and PUBLIC ECONOMICS. Any opinions expressed here are those of the author(s) and not those of the Centre for Economic Policy Research. Research disseminated by CEPR may include views on policy, but the Centre itself takes no institutional policy positions. The Centre for Economic Policy Research was established in 1983 as an educational charity, to promote independent analysis and public discussion of open economies and the relations among them. It is pluralist and non-partisan, bringing economic research to bear on the analysis of medium- and long-run policy questions. These Discussion Papers often represent preliminary or incomplete work, circulated to encourage discussion and comment. Citation and use of such a paper should take account of its provisional character. Copyright: Daniel Diermeier, Georgy Egorov and Konstantin Sonin POLITICAL ECONOMY OF REDISTRIBUTION Abstract It is often argued that additional constraints on redistribution such as granting veto power to more players in the society makes property better protected from expropriation. We use a legislative bargaining-type model to demonstrate that this intuition may be ‡flawed. Increasing the number of veto players or raising the supermajority requirement for redistribution may reduce protection on the equilibrium path. -
A Dozen MIT Faculty and Alumni Who Are Shaping the Future of Economics
24/9/2014 MIT Spectrum | Continuum | A Dozen MIT Faculty and Alumni Who Are Shaping the Future of Economics A DOZEN MIT FACULTY AND ALUMNI WHO ARE SHAPING THE FUTURE OF ECONOMICS September 23rd, 2014 MIT Sloan professor Kristin Forbes PhD ’98 is one of three economists on the IMF’s “Generation Next” list to be both MIT alumnus and faculty member. The International Monetary Fund (IMF) has populated nearly half its “Generation Next” list—which celebrates 25 economists under the age of 45—with MIT faculty and alumni. In some cases, the featured economists are both: Esther Duflo PhD ’99, Amy Finkelstein PhD ’01, and Kristin Forbes PhD ’98 all hold endowed chairs in MIT’s Department of Economics. The 12 scholars listed below study poverty and health care, education and real estate, crime and taxes. What they have in common is that the international finance community deems them “economists to keep an eye on” for the way they are shaping global thought—and that they’ve spent time honing their ideas on MIT’s campus. Melissa Dell PhD ’12, a Harvard assistant professor who at age 31 ties as the youngest on the IMF’s list, has studied how government crackdowns on drug violence can influence economic outcomes. Her most recent publication, whose coauthors include MIT’s Benjamin Olken, looks at the economic effects of climate. Esther Duflo PhD ’99 is MIT’s Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics, and a founder and director of the Abdul Latif Jameel Poverty Action Lab (J-PAL). -
Endogenous Property Rights
NBER WORKING PAPER SERIES ENDOGENOUS PROPERTY RIGHTS Daniel Diermeier Georgy Egorov Konstantin Sonin Working Paper 19734 http://www.nber.org/papers/w19734 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 December 2013 We are grateful to seminar participants in Princeton, Moscow, Frankfurt, Mannheim, Northwestern, the University of Chicago and to participants of MACIE conference in Marburg and CIFAR meeting in Toronto for valuable comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer- reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2013 by Daniel Diermeier, Georgy Egorov, and Konstantin Sonin. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Endogenous Property Rights Daniel Diermeier, Georgy Egorov, and Konstantin Sonin NBER Working Paper No. 19734 December 2013 JEL No. D72,D74,P48 ABSTRACT It is often argued that additional checks and balances provide economic agents with better protection from expropriation of their wealth or productive capital. We demonstrate that in a dynamic political economy model this intuition may be flawed. Surprisingly, increasing the number of veto players or the majority requirement for redistribution may reduce property right protection on the equilibrium path. The reason is the existence of two distinct mechanisms of property rights protection. One are formal constraints that allow individuals or groups to block any redistribution which is not in their favor. -
Contracts As Reference Points*
CONTRACTS AS REFERENCE POINTS* Oliver Hart and John Moore July 2006, revised March 2007 We argue that a contract provides a reference point for a trading relationship: more precisely, for parties’ feelings of entitlement. A party’s ex post performance depends on whether he gets what he is entitled to relative to outcomes permitted by the contract. A party who is shortchanged shades on performance. A flexible contract allows parties to adjust their outcome to uncertainty, but causes inefficient shading. Our analysis provides a basis for long-term contracts in the absence of noncontractible investments, and elucidates why “employment” contracts, which fix wage in advance and allow the employer to choose the task, can be optimal. * An early version of this paper was entitled “Partial Contracts.” We are particularly indebted to Andrei Shleifer and Jeremy Stein for useful comments and for urging us to develop Section V. We would also like to thank Philippe Aghion, Jennifer Arlen, Daniel Benjamin, Omri Ben- Shahar, Richard Craswell, Stefano Della Vigna, Tore Ellingsen, Florian Englmaier, Edward Glaeser, Elhanan Helpman, Ben Hermalin, Louis Kaplow, Emir Kamenica, Henrik Lando, Steve Leider, Jon Levin, Bentley MacLeod, Ulrike Malmendier, Sendhil Mullainathan, Al Roth, Jozsef Sakovics, Klaus Schmidt, Jonathan Thomas, Jean Tirole, Joel Watson, Birger Wernerfelt, two editors and three referees for helpful suggestions. In addition we have received useful feedback from audiences at the Max Planck Institute for Research on Collective Goods in Bonn, -
Theloerder Institute for Economic Research
-TEL- /WI Theloerder Institute for Economic Research, Tel Aviv University 'The Eitan Berglas School of Economics CRV 44 GIANNINI FOUNDATiON OF GRIcULTURAL NOIVIICS Trim inivu raT wily' 173'73 li7n1)i7 IDD TaTi-17J1 110'011'31N mann iv1rY7 no`71-17Dri JOHN NASH: THE MASTER OF ECONOMIC MODELING by Ariel Rubinstein* Working Paper No.29-94 November, 1994 * The Eitan Berglas School of Economics, Tel-Aviv University and Princeton University Prepared for the Scandinavian Journal of Economics THE FOERDER INSTITUTE FOR ECONOMIC RESEARCH Faculty of Social Sciences Tel-Aviv University, Ramat Aviv, Israel. page 2 1. John Nash During the past two decades non-cooperative game theory has become a central topic in economic theory. Many scholars have contributed to this revolution, none more than John Nash. Following the publication of von Neumann and Morgenstern's book, it was Nash's papers in the early fifties that pointed the way for future research in game theory. The notion of Nash equilibrium is indispensable. Nash's formulation of the bargaining problem and the Nash bargaining solution constitute the cornerstone of modern bargaining theory. His insights into the non-cooperative foundations of cooperative game theory initiated an area of research known as the Nash program. His analysis of the demand game, in which he uses a perturbation of a game to select an equilibrium, inspired the construction of several refinements of the notion of Nash equilibrium. A scholar's influence does not necessarily qualify him for a Nobel prize. One may argue that such awards are a social institution established to serve social goals. -
Take-Up and Targeting: Experimental Evidence from SNAP
Take-up and Targeting: Experimental Evidence from SNAP Amy Finkelstein and Matthew J. Notowidigdo∗ April 2019 Abstract We develop a framework for welfare analysis of interventions designed to increase take-up of social safety net programs in the presence of potential behavioral biases. We calibrate the key parameters using a randomized field experiment in which 30,000 elderly individuals not enrolled in – but likely eligible for – the Supplemental Nutrition Assistance Program (SNAP) are either provided with information that they are likely eligible, provided with this information and also offered assistance in applying, or are in a “status quo” control group. Only 6 percent of the control group enrolls in SNAP over the next 9 months, compared to 11 percent of the Information Only group and 18 percent of the Information Plus Assistance group. The individuals who apply or enroll in response to either intervention have higher net income and are less sick than the average enrollee in the control group. We present evidence consistent with the existence of optimization frictions that are greater for needier individuals, which suggests that the poor targeting properties of the interventions reduce their welfare benefits. JEL codes: C93; H53; I38 Keywords: SNAP; Food Stamps; Take-Up; Targeting; Welfare. ∗MIT and Northwestern (respectively), National Bureau of Economic Research, and J-PAL North America. We are grateful to Martin Aragoneses, Aileen Devlin, Carolyn Stein, John Tebes, and Ting Wang for excellent research assis- tance and to Laura Feeney for superb research management. We thank our excellent partners at Benefits Data Trust, and particularly Rachel Cahill and Matt Stevens who worked tirelessly and patiently to address our inumerable re- quests and questions. -
Rohini Pande
ROHINI PANDE 27 Hillhouse Avenue 203.432.3637 (w) PO Box 208269 [email protected] New Haven, CT 06520-8269 https://campuspress.yale.edu/rpande/ EDUCATION 1999 Ph.D., Economics, London School of Economics 1995 M.Sc. in Economics, London School of Economics (Distinction) 1994 MA in Philosophy, Politics and Economics, Oxford University 1992 BA (Hons.) in Economics, St. Stephens College, Delhi University PROFESSIONAL EXPERIENCE ACADEMIC POSITIONS 2019 - Henry J. Heinz II Professor of Economics, Yale University 2018 – 2019 Rafik Hariri Professor of International Political Economy, Harvard Kennedy School, Harvard University 2006 – 2017 Mohammed Kamal Professor of Public Policy, Harvard Kennedy School, Harvard University 2005 – 2006 Associate Professor of Economics, Yale University 2003 – 2005 Assistant Professor of Economics, Yale University 1999 – 2003 Assistant Professor of Economics, Columbia University VISITING POSITIONS April 2018 Ta-Chung Liu Distinguished Visitor at Becker Friedman Institute, UChicago Spring 2017 Visiting Professor of Economics, University of Pompeu Fabra and Stanford Fall 2010 Visiting Professor of Economics, London School of Economics Spring 2006 Visiting Associate Professor of Economics, University of California, Berkeley Fall 2005 Visiting Associate Professor of Economics, Columbia University 2002 – 2003 Visiting Assistant Professor of Economics, MIT CURRENT PROFESSIONAL ACTIVITIES AND SERVICES 2019 - Director, Economic Growth Center Yale University 2019 - Co-editor, American Economic Review: Insights 2014 – -
Economic Globalization
Economic Globalization Academic Year: 2016/2017 Semester: 4th Term Instructor(s): Isabel Horta Correia Course Description: Facts of globalization. Globalization and Macro in Open Economies. Competitiveness and Productivity. The distribution of the gains of globalization. Policies for/against globalization. ___________________________________________________________________________ Course Content: 1- Macroeconomics in a global economy. 2- Global imbalances. 3- What is globalization? 2- Facts on globalization. 3- Competitiveness and productivity. 4- Gains from globalization. 5- The distribution across countries and across agents of globalization gains/losses and the political economy of globalization. ____________________________________________________________________________ Course Objectives: Understanding of the globalization controversy with the economist lens. The myths and its robustness to economic theory. _____________________________________________________________________________ Grading: Intermediate continuous evaluation: 50% Final test: 50% Extra Costs (case studies, platforms...): Not applicable _____________________________________________________________________________ Suggested Bibliography: • Ruo Chen, Gian Maria Milesi-Ferretti and Thierry Tressel, 2013, “External imbalances in the eurozone”, Economic Policy, pp. 101–142 • Gian-Maria Milesi-Ferretti and Cédric Tille, 2011 ,“The great retrenchment: international capital flows during the global financial crisis”, Economic Policy, pp. 289–346 • Sascha O. Becker and Marc-Andreas