Political Economy Primer Semestre 2009

Profesor: Mariano Tommasi Asistente: Laura Trucco

Este curso es una introducción a la literatura conocida en inglés como Political Economy (o Modern Political Economy ) que estudia la determinación endógena de las políticas económicas. El campo se encuentra en la intersección entre Economía y Ciencia Política, y utiliza a la Teoría de Juegos como una herramienta clave. El curso va a transitar paralelamente por tres andariveles complementarios: 1) Ejes conceptuales y áreas de aplicación de Political Economy (tales como instituciones, problemas de agencia en política, política fiscal, redistribución) 2) Modelos o building blocks conceptuales (tales como modelos de votación, median voter, bargaining, juegos repetidos, etc) 3) Aplicaciones a políticas específicas en países específicos, especialmente la Argentina y América Latina.

Libros de texto

Persson and Tabellini (2000) Political Economics: Explaining Economic Policy . MIT Press.

Mueller, Dennis (2003) Public Choice III . Cambridge: Cambridge University Press.

Libros de referencia

Acemoglu, Daron, and James Robinson (2005) Economic Origins of Dictatorship and Democracy . Cambridge University Press. (AR)

Boix, Carles (2003) Democracy and Redistribution. Cambridge University Press, New York

Dixit, Avinash (1996) The Making of Economic Policy: A Transaction-Cost Politics Perspective . MIT Press.

Drazen, Allan (2000) Political Economy in Macroeconomics Princeton University Press.

Grossman, Gene and Elhanan Helpman (2001) Special Interest Politics , MIT Press.

McCarty and Meirowitz (2007) Political Game Theory , Cambridge. (M&M)

Mueller, Dennis (1997) Perspectives on Public Choice. A Handbook . Cambridge University Press.

Spiller and Tommasi (2007) The Institutional Foundations of Public Policy in Argentina . Cambridge University Press.

Stein, Ernesto, Mariano Tommasi, Pablo T. Spiller and Carlos Scartascini. 2008. Policymaking in Latin America: How Politics Shapes Policies, Washington, DC: InterAmerican Development Bank .

Weingast, Barry and Donald Wittman (2006) The Oxford Handbook of Political Economy, Oxford, NY: Oxford University Press. (HPE)

Basic Models of Politics

Grossman and Helpman (2001) “Voting and Elections” Chapter 2 in their Special Interest Politics . MIT Press. See also Chapter 1

Acemoglu, Daron, and James Robinson (2005) “Democratic Politics”, Chapter 4 in Economic Origins of Dictatorship and Democracy . Cambridge University Press.

Persson, Torsten and Guido Tabellini (2000) Political Economics. Explaining Economic Policy , MIT Press, Cambridge (Chapter 3)

Dewan, Torun and Kenneth Shepsle (2008) “Review Article: Recent Economic Perspectives on Political Economy, Part I”, British Journal of Political Science , 38: 363- 382.

Dixit, Avinash and John Londregan , “The determinants of success of special interest groups in redistributive politics ” Journal of Politics 58 (November 1996): 1132-55.

Coate, Stephen and StephenMorris (1995) “On the Form of Transfers to Special Interests,” Journal of Political Economy , 103, 1210-1235.

Matsusaka, J (1995) “The Economic Approach to Democracy,” in The New Economics of Human Behavior , edited by M. Tommasi and K. Ierulli, Cambridge University Press.

Legislative Bargaining

Baron, David and John Ferejohn (1989) “Bargaining in Legislatures”, American Political Science Review , Vol. 83, No. 4, December, 1181-1206.

McCarty and Meirowitz (2007) Political Game Theory , Cambridge. Ch. 10

Morelli, M (1999) “Demand Competition and Policy Compromise in Legislative Bargaining” American Political Science Review 93(4).

Persson, Torsten and Guido Tabellini (2000) Political Economics. Explaining Economic Policy , MIT Press, Cambridge (Chapter 7)

Principal-Agent Models and Delegation in Politics (Politicians, Voters and Elections )

Persson, Torsten and Guido Tabellini (2000) Political Economics. Explaining Economic Policy , MIT Press, Cambridge (Chapter 4)

Ferejohn, J. (1986) “Incumbent performance and electoral control”, Public Choice No 1, 50, 5-25

M&M, Ch. 11 “Mechanism Design and Agency Theory” Persson, Roland and Tabellini (1997) “Separation of Powers and Political Accountability” Quarterly Journal of Economics, vol 112, No 4

Snyder, J. and M Ting (2008) “Interest Groups and the Electoral Control of Politicans” Journal of Public Economic , 92, 3-4.

Besley, T (2007) Principled Agents. The Political Economy of Good Government . Oxford University Press.

Besley, T. (2005) “Political Selection” Journal of Economic Perspectives 19(3): 43-60.

Caselli and Morelli (2004) “Bad Politicians” Journal of Public Economics 88 pp. 759- 782.

Hodler, Loertscher and Rohner (2007) “Inefficient Policies and Incumbency Advantage”, mimeo.

Diermeier, Daniel; M. Keane and Antonio Merlo (2005) “A Political Economy Model of Congressional Careers”, American Economic Review , Vol. 95, No. 1, March, 347- 373.

Mattozzi, Andrea, and Antonio Merlo, (2005b). “Mediocracy” Working Paper, Department of Economics, University of Pennsylvania

Maskin, Erik and Jean Tirole (2004) "The Politician and The Judge: Accountability in Government", American Economic Review , vol. 94, n. 4, September, p. 1034-1054.

Fox, Justin and K Shotts (2008) “Delegates or Trustees? A Theory of Political Accountability” Mimeo, Yale.

Martinelli, Cesar (2006) “Analisis Economico de la Conducta de los Votantes” Mimeo, ITAM. Mexico.

Alesina and Tabellini (2007) “Bureaucrats or Politicians? Part I: A Single Policy Task” American Economic Review March: 169-179.

Political Institutions and Economic Policy

Lizzeri, Alessandro and Nicola Persico (2001) “The Provision of Public Goods under Alternative Electoral Incentives”, American Economic Review , Vol. 91, No. 1, March, 225-239.

Personn, Torsten and Guido Tabellini (2006) “Electoral Systems and Economic Policy”, Chapter 40 in Weingast, Barry and Donald Wittman The Oxford Handbook of Political Economy, Oxford, NY: Oxford University Press.

Inter-American Development Bank. 2005. The Politics of Policies. Economic and Social Progress in Latin America and the Caribbean 2006 Report. Washington, DC. Available online at: http://www.iadb.org/res/ipes/2006/index.cfm?language=english

Stein, Ernesto, Mariano Tommasi, Pablo T. Spiller and Carlos Scartascini. 2008. Policymaking in Latin America: How Politics Shapes Policies, Washington, DC: InterAmerican Development Bank, Harvard Rockefeller Center.

Tsebelis, George (2002) Veto Players: How Political Institutions Work . Princeton University Press

Morelli, Massimo and Michele Tertilt (2004) “Policy Stability under Different Electoral Systems” Mimeo.

Scartascini, Stein and Tommasi (2008) “Veto Players, Intertemporal Interactions and Policy Adaptability: How Do Political Institutions Work?” Working Paper 645, Research Department Inter-American Bank.

Primo and Snyder (2008) “Party Strength, the Personal Vote, and Government Spending” Mimeo. MIT.

Citizen Candidate Model and Applications

Besley, Timothy and Stephen Coate (1997) “An Economic Model of Representative Democracy,” Quarterly Journal of Economics , 85-114.

Osborne, M. and Slivinski, A. (1996) “A Model of Political Competition with Citizen- Candidates”, Quarterly Journal of Economics , vol 11, No 1

Grossman and Helpman (2001) Chapter 2, section 2.2.3 “Endogenous Candidates” in their Special Interest Politics . MIT Press.

Le Borgne, Eric, and Ben Lockwood (2002) “Candidate Entry, Screening, and the Political Budget Cycle” IMF working paper 02/48.

Poutvaara and Takalo (2007) “Candidate Quality”, International Tax and Public Finance , vol 14, no 1.

Morelli, Massimo (2004) “Party Formation and Policy Outcomes under Different Electoral Systems” Review of Economic Studies 71(3): 829-53.

Dhillon, Amrita (2003) “Political Parties and Coalition Formation” Warwick Economic Research Paper No 697.

Political Business Cycles

Paldam (1997) “Political Business Cycles” Chapter 16 in Mueller Perspectives on Public Choice. A Handbook . Cambridge University Press.

Franzese and Long Jusko (2006) “Political-Economic Cycles” ch 30 in HPE.

Rogoff, K (1990) “Equilibrium Political Budget Cycles” American Economic Review . 80: 21-36.

Shi, M. y Svensson, J. (2006) “Political Budget Cycles: Do they differ across countries and why?” Journal of Public Economics .

Brender, Adi and Drazen, Allan (2005), "Political Budget Cycles in New Versus Established Democracies" . Journal of Monetary Economics , Vol. 52, No. 5, pp. 1271- 1295.

Ferrereira and Bugarin (2007) “Political Budget Cycles in a Federation: The Effects of Partisan Voluntary Transfers” Mimeo. University of Brazilia.

Streb and Saporiti (2003) “Separation of Powers and Political Budget Cycles” CEMA Working Paper 251.

Kaplan, S. (2009) “From Spendthrifts To Misers: Globalization And Latin American Politicians” Chapter 2, PhD Dissertation, Yale University. Department of Political Science”.

Persson, T. and G. Tabellini (2002) “Do electoral cycles differ across political systems?” Mimeo.

Fiscal Politics

Gradstein, Mark (1999) “Optimal Taxation and Fiscal Constitution”, Journal of Public Economics , Vol. 72, Issue 3, June, 471-485.

Besley, T (2007) Principled Agents. The Political Economy of Good Government . Oxford University Press. Chapter 4.

Brender, Adi and Drazen, Allan (2008) “How Do Budget Deficits and Economic Growth Affect Reelection Prospects? – Evidence from a Large Panel of Countries”. American Economic Review , vol 98, 5.

Peltzman, S. (1992) “Voters as fiscal conservatives.” The Quarterly Journal of Economics , vol.107(2), pages 327, 361.

Jones, Mark, Osvaldo Meloni y Mariano Tommasi (2007) “Voters as Fiscal Liberals”. Mimeo, Universidad de San Andrés.

Timmons, Jeffrey (2005) “The Fiscal Contract. States, Taxes, and Public Services”, World Politics , 57(July): 530-567.

Hettich and Winter (1997) “The Political Economy of Taxation” Ch 22 in Mueller Perspectives on Public Choice. A Handbook . Cambridge University Press.

Hettich and Winter (2006) “Structure and Coherence in the Political Economy of Public Finance” Ch 25 in HPE.

Battaglini and Coate (2008) “The Political Economy of Fiscal Policy”, Journal of the European Economic Association , Vol. 6, No. 2-3, Pages 367-380

Alesina and Tabellini (2005) “Why is Fiscal Policy Procyclical?” Mimeo.

Ingberman and Inman (1987) The Political Economy of Fiscal Policy” NBER Working Paper No. 2405

Lobbying and Interest Groups

Grossman and Helpman (2005) “A Protectionist Bias in Majoritarian Politics” Quarterly Journal of Economics November, 1239-1280.

Grossman, Gene and Elhanan Helpman (2001) Special Interest Politics , MIT Press.

Austen-Smith, David (1997) “Interest Groups: Money, information, and influence” ch 14 in D. Mueller (ed.) Perspectives in Public Choice: A Handbook . Cambridge University Press.

Murillo, Scartascini and Tommasi (2008) “The Political Economy of Productivity: Actors, Arenas, and Policies. A Framework of Analysis” Inter-American Development Bank, Research Department, Working Paper 640.

Campante and Ferreira (2004) “Inefficient Lobbying, Populism, and Oligarchy” , Mimeo, World Bank.

Besley, Timothy and Stephen Coate (2001) “Lobbying and Welfare in a Representative Democracy”, The Review of Economic Studies ”, Vol. 68, No. 1, January, 67-82.

Iaryczower, Spiller and Tommasi (2006) “Judicial Lobbying: The Politics of Labor Law Constitutional Interpretation”, American Political Science Review , Vol. 100, No. 1, February.

Prat, Andrea (2006) “Rational Voters and Political Advertising” Chapter 3 in Weingast, Barry and Donald Wittman (2006) The Oxford Handbook of Political Economy, Oxford, NY: Oxford University Press.

Pyne, Derek (2006) “Microfoundations of influencing public opinion: Lobbying and voting for trade policies”. Journal of Economic Integration 21(3): 551-576 .

Fearon, J. D. 1999. “Why Ethnic Politics and “Pork” Tend to Go Together”, Presented at a MacArthur Foundation-sponsored conference on Ethnic Politics and Democratic Stability held at Wilder House, University of Chicago, May 21-23.

Bawn, Kathleen (1999) “Constructing ‘Us’: Ideology, Coalition Politics, and False Consciousness” American Journal of Political Science 43, 2, April.

Galor, Oded, and O. Moav "Das Human Kapital: A Theory of the Demise of the Class Structure", Review of Economic Studies , 73 (January 2006).

Drazen, A., N. Limão and T. Stratmann (2007) cal Contribution Caps and Lobby Formation: Theory and Evidence,” Journal of Public Economics , Vol. 91, No. 3-4 (April).

Lohmann, Susanne (2003) “Representative Government and Special Interest Politics” Journal of Theoretical Politics , Vol. 15, No. 3, 299-319.

Cusack, T.. T. Iversen and D. Soskice (2007) “Economic Interests and the Origins of Electoral Systems” American Political Science Review Vol. 101, No. 3 August

Iversen and D. Soskice (2008) “Distribution and Redistribution: The Shadow From the Nineteenth Century” World Politics , July.

Maggi, G. and Rodriguez-Clare, A. (2007) “A Political-Economy Theory of Trade Agreements,” The American Economic Review , vol. 97(4), pp. 1374-1406, September

Politics , forthcoming July

Intertemporal Politics

Dixit, Avinash, Gene Grossman and Faruk Gul (2000) “The Dynamics of Political Compromise” Journal of Political Economy 108(3): 531-68.

Alesina, Alberto (1988) “Credibility and Policy Convergence in a Two-Party System with Rational Voters”, American Economic Review 78 (4), 796-805.

Besley and Coate (1998) “Sources of Inefficiency in a Representative Democracy: A Dynamic Analysis” American Economic Review , Vol. 88, No. 1, March, 139-156

Spiller and Tommasi (2007) “A Theory of Intertemporal Political Cooperation” Ch 2 in their The Institutional Foundations of Public Policy in Argentina . Cambridge University Press.

Political Development: Economic Theories of Democratization

AR, chapters 2 and 6

Przeworski, Adam (2008) “Political Rights, Property Rights, and Economic Deelopment” Mimeo. NYU.

Fearon James (2006) “Self Enforcing Democracy”, Paper presented at the 2006 Annual Meetings of the American Political Science Association, Philadelphia, PA, August 31- September 3.

Llavador and Oxoby (2005) “Partisan Competition, Growth, and the Franchise” Quarterly Journal of Economics 120: 1155-1188.

Lizzeri, Alessandro and Nicola Persico (2004) “Why Did the Elites Extend the Suffrage? Democracy and the Scope of Government, with an Application to Britain’s “Age of Reform””, The Quarterly Journal of Economics , May, 707-765.

Myerson, Roger B. (2008) “The Autocrat’s Credibility Problem and Foundations of the Constitutional State”, American Political Science Review, Vol. 102, No. 1, February, 125-139.

Gradstein, Mark (2004) “Inequality, Democracy and the Emergency of Institutions”, CEPR Discussion Paper No. 4187, January.

Federalismo

Cremer and Palfrey (1999) "Political Confederation", American Political Science Review , 93, n°1, March.

Careaga, Maite and Barry Weingast (2003) “Fiscal Federalism, Good Governance, and Economic Growth in Mexico”, in Rodrik, Dani (ed.) In Search of Prosperity:Analytic Narratives on Economic Growth , Princeton, NJ: Princeton University Press.

Stepan, Alfred (2004) “Toward a New Comparative Politics of Federalism, Multinationalism and Democracy: Beyond Rikerian Federalism”, Chapter 2 in Gibson, Edward (ed.) Federalism and Democracy in Latin America. Baltimore: Johns Hopkins University Press .

Treisman, Daniel (2007) The Architecture of Government. Rethinking Political Decentralization. Cambridge, NY: Cambridge University Press.

Besley, Timothy and Stephen Coate (2003) “Centralized versus Decentralized Provision of Local Public Goods: A Political Economy Approach”, Journal of Public Economics , Vol. 87, Issue 12, December, 2611-2637.

Lockwood, Ben (2002) “Distributive Politics and the Costs of Centralization” Review of Economic Studies .

Beramendi, Pablo; Díaz-Cayeros, Alberto. 2006. “Distributive tensions in developing federations”. Paper presented at the 102th meeting of the American Political Science Association, held in Philadelphia, PA, from 31 Aug. to 3 Sep.

Ardanaz, Leiras and Tommasi (2009) “The foundations of ineffective policies and weak accountability. Federalism argentine style” mimeo, Universidad de San Andrés

Institutions

Calvert, R. (1995) “Rational Actors, Equilibrium and Social Institutions” in Knight and Sened Explaining Social Institutions . University of Michigan Press.

Calvert, Randall (1995) “The Rational Choice Theory of Institutions: Cooperation, Coordination, and Communication” in Banks and Hanushek (eds.) Modern Political Economy . Cambridge University Press.

Aoki, Masahiko (2005) “Endogeneizing Institutions and Institutional Change”, Revised version of a paper presented at an invited session of the 2005 World Congress of the International Economic Association.

Greif, Avner (2006) “Endogenous Institutions and Game-Theoretic Analysii” chapter 5 in his Institutions and the Path to the Modern Economy . Cambridge University Press.

Greif, Avner and David Laitin (2004) “A Theory of Endogenous Institutional Change”, American Political Science Review , Vol.98, No. 4, November, 633-652.

Kingston, C. and G. Caballero (2006) “Comparing Theories of Institutional Change” Paper presented at ISNIE conference.

Scartascini, C. and M. Tommasi, with L. Trucco (2009) “The Making of Policy: Formal or Informal Arenas?” Mimeo, Universidad de San Andrés.

Aplicaciones: Argentina, otros paises de América Latina, y algunas comparaciones

Acuña, C. H. S.Galiani & M.Tommasi (2007) “Understanding Reform: The Case of Argentina” in Fanelli (ed.) Understanding Market Reforms in Latin America . Palgrave MacMillan.

Alston, Lee J. and Andrés Gallo (2007) “Electoral Fraud, the Rise of Perón, and the Demise of Checks and Balances in Argentina” Mimeo, University of Colorado.

Cortes Conde, Roberto (1998) Progreso y declinación de la economía argentina . Fondo de Cultura Económica.

Della Paolera and Taylor (2003) A New Economic History of Argentina . Cambridge University Press.

Galiani, Heymann & Tommasi (2003) “Great Expectations and Hard Times: The Argentine Convertibility Plan”,Economía: Journal of the Latin American and Caribbean Economic Association Spring 2003, pp. 109-160.

Grabowski, Richard (2008) “Models of long-run development: Latin America and East Asia” Journal of Institutional Economics 4(1): 25-50.

Graham, Carol and S. Chattopadhyay (2008) “Public Opinion Trends in Latin America (and the U.S.): How Strong is Support for Markets, Democracy, and Regional Integration?” Mimeo, Brookings Institution.

Remmer, Karen (2007) “The Political Economy of Patronage: Expenditure Patterns in the Argentine Provinces, 1983-2003”, The Journal of Politics , Vol. 69, No. 2, May, 363- 377.

Smith, Peter (2005) Democracy in Latin America: Political change in comparative perspective , Oxford University Press .

Spiller Pablo T. and Mariano Tommasi. 2007. The Institutional Foundations of Public Policy in Argentina , Cambridge University Press.

Stein, Ernesto, Mariano Tommasi, Pablo T. Spiller and Carlos Scartascini. 2008. Policymaking in Latin America: How Politics Shapes Policies, Washington, DC: InterAmerican Development Bank, Harvard Rockefeller Center.

Stokes, Susan (2005) “Perverse Accountability: A Formal Model of Machine Politics with Evidence from Argentina” American Political Science Review 99 (3), August.

Tommasi, Mariano (2006) “Federalism in Argentina and the Reforms of the 1990s”. En Wallack, Jessica S. y T.N. Srinivasan (comps.) Federalism and Economic Reform. International Perspectives , New York: Cambridge University Press.

Tommasi, Mariano (2008) “Un pais sin rumbo. Politica, Politicas Publicas y Desarrollo en Argentina (con una leve comparación al caso chileno)” Mimeo, Universidad de San Andrés.