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Course Syllabus

Bachelor 2020/2021

Рolitical Economy

Type: Elective course (Economics)
Area of studies: Economics
Delivered by: Department of Theoretical Economics
Where: Faculty of Economic Sciences
When: 3 year, 3 module
Mode of studies: offline
Instructors: Kemal Kivanc Akoz, Cemal Eren Arbatli, Vladimir Shchukin
Language: English
ECTS credits: 3
Contact hours: 36

Course Syllabus

Full 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 di erent 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

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

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

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).
    Reading: Persson, Torsten, and Guido Tabellini (2000), Ch. 2-3; Acemoglu, Daron, and James Robinson (2006), Ch. 4 Lee, David, and Enrico Moretti, and Matthew J. Butler (2004). \Do Voters Aect or Elect Policies? Evidence from the U.S. House," Quarterly Journal of Economics, 119(3), 807-859. Husted, Thomas and Lawrence Kenny (1997). `The Eect of the Expansion of the Voting Franchise on the Size of Government", Journal of Political Economy, 105(1), 54-81. Miller, Grant (2008). \Women's Surage, Political Responsiveness, and Child Survival in American History", Quarterly Journal of Economics, 123(3), 1287- 1327. Chattopadhyay, Raghabendra and Esther Du o (2004). \Women as Policy Makers: Evidence from a Randomized Policy Experiment in India," Econometrica, 72(5), 1409-1443. Pande, Rohini (2003). \Can Mandated Political Representation Increase Policy In uence for Disadvantaged Minorities? Theory and Evidence from India," American Economic Review, 93(4), 1132-1151.
  • Section 2. (b) Electoral Competition, i. Policy Platforms: Downsian Policy Convergence Theorem, and non-convergence.
    Reading: Gehlbach (2013), Ch. 2-3; Persson, Torsten, and Guido Tabellini (2000), Ch. 2-3
  • Section 2. (b) ii. Election Campaigns, Media and Incumbency
    Reading: DellaVigna, Stefano, and Ethan Kaplan. "The Fox News eect: Media bias and voting." The Quarterly Journal of Economics 122.3 (2007): 1187- 1234. Enikolopov, Ruben, Maria Petrova, and Ekaterina Zhuravskaya. "Media and political persuasion: Evidence from Russia." American Economic Review 101.7 (2011): 3253-85. Boas, T., & Hidalgo, D. 2011. \Controlling the airwaves: Incumbency advantage and community radio in Brazil." American Journal of Political Science 55(4): 869-885. Da Silveira, B. S., & De Mello, J. M. 2011. \`Campaign advertising and election outcomes: Quasi-natural experiment evidence from gubernatorial elections in Brazil." The Review of Economic Studies 78(2): 590-612. Spenkuch, J. L., & Toniatti, D. 2016. \Political Advertising and Election Outcomes." Erikson, R. S., & Titiunik, R. 2015. \Using regression discontinuity to uncover the personal incumbency advantage." Quarterly Journal of Political Science 10(1): 101-119. Banks, Jerey S. "A model of electoral competition with incomplete information." Journal of Economic Theory 50.2 (1990): 309-325. Gentzkow, Matthew, and Jesse M. Shapiro. "Media bias and reputation." Journal of political Economy 114.2 (2006): 280-316. Larreguy, H. A., Marshall, J.,& Snyder, J. M. 2018. \Leveling the playing eld: How campaign advertising can help non-dominant parties." Journal of the European Economic Association.
  • Section 2. (b) iii. Lobbying
    Reading: Gehlbach (2013), Ch. 3; Persson, Torsten, and Guido Tabellini (2000), Ch. 7 Grossman, Gene M., and Elhanan Helpman (1994) \Protection for Sale." American Economic Review 84, 833-850
  • Section 2. (b) iv. Vote buying, electoral fraud and voter intimidation
    Reading: Dekel, Eddie, Matthew O. Jackson, and Asher Wolinsky (2008), "Vote Buying: General Elections," Journal of Political Economy 116 (2), pp 351-380. * Nichter, Simeon (2008), "Vote Buying or Turnout Buying? Machine Politics and the Secret Ballot," APSR 102 (1), 19-31. Finan, Frederico and Laura Schecter (2012) "Vote-Buying and Reciprocity", Econometrica, 80(2): 863-881. * Gonzalez-Ocantos, Ezequiel, Chad Kiewiet de Jonge, Carlos Melendez, Javier Osorio, David W. Nickerson (2012) "Vote Buying and Social Desirability Bias: Experimental Evidence from Nicaragua." American Journal of Political Science, 56(1): 202{217. * Vicente, P. C. (2014). Is vote buying eective? Evidence from a eld experiment in West Africa. The Economic Journal, 124(574). Hsieh, C. T., Miguel, E., Ortega, D. (2011). The price of political opposition: Evidence from venezuela's maisanta. American Economic Journal: Applied Economics, 3(2), 196-214. * Enikolopov, R., Korovkin, V., Petrova, M., Sonin, K., Zakharov, A. (2013). Field experiment estimate of electoral fraud in Russian parliamentary elections. Proceedings of the National Academy of Sciences, 110(2), 448-452. Collier, P., Vicente, P. C. (2014). Votes and violence: evidence from a eld experiment in Nigeria. The Economic Journal, 124(574). * Hidalgo, F. D., & Nichter, S. 2016. \Voter Buying: Shaping the Electorate through Clientelism." American Journal of Political Science 60(2): 436- 455.
  • Section 3. Public Policy. (a) Policy under the shadow of re-election: i. Political accountability
    Reading: Ferejohn J. 1986. \Incumbent Performance and Electoral Control." Public Choice 50:5-26. Fearon, J. D. 1999. \Electoral Accountability and the Control of Politicians: Selecting Good Types versus Sanctioning Poor Performance." in (ed.) A Przeworski, S Stokes, B Manin, Democracy, Accountability, and Representation
  • Section 3. (a). ii. Targeted public good provision
    Reading: Lizzeri, Alessandro, and Nicola Persico. "The provision of public goods under alternative electoral incentives." American Economic Review 91.1 (2001): 225-239.
  • Section 3. (a). iii. White Elephants
    Reading: Robinson, James A., and Ragnar Torvik. "White elephants." Journal of Public Economics 89.2-3 (2005): 197-210.
  • Section 3. (a). iv. Electoral Cycles and Commitment
    Reading: Persson, Torsten, and Guido Tabellini (2000), Ch. 15-16. Rogo, Kenneth, and Anne Sibert. "Elections and macroeconomic policy cycles." The review of economic studies 55.1 (1988): 1-16.
  • Section 3. (b) Composition and Quality of Politicians
    Reading: * Caselli, Francesco, and Massimo Morelli. "Bad politicians." Journal of Public Economics 88.3-4 (2004): 759-782.; * Besley, Timothy, 2005, \Political Selection" Journal of Economic Perspectives, 19(3), 43-60. * Jones, B. F., & Olken, B. A. (2005). \Do leaders matter? National leadership and growth since World War II." The Quarterly Journal of Economics, 120(3), 835-864. Besley, T., Montalvo, J. G., & Reynal-Querol, M. (2011). Do educated leaders matter?. The Economic Journal, 121(554), F205-227. * Dal Bo, Ernesto, Pedro Dal Bo, and Jason Snyder. "Political dynasties." The Review of Economic Studies 76.1 (2009): 115-142. Galasso, V., & Nannicini, T. 2011. \Competing on Good Politicians." American Political Science Review 105(1): 79-99. Avis, E., Ferraz, C., Finan, F., & Varj~ao, C. 2017. \Money and politics: The eects of campaign spending limits on political competition and incumbency advantage." National Bureau of Economic Research. Bhalotra, S., Clots-Figueras, I. & Iyer, L. (2018). \Pathbreakers? Women's Electoral Success and Future Political Participation." The Economic Journal 128(613): 1844-1878.
  • Section 3. (c) Corruption
  • Section 4. Non-Electoral Political Bargaining. (a) Political Institutions. i. Political rule as coalitions
    Reading: Gehlbach (2013), Ch. 6; Acemoglu, Daron, Georgy Egorov, and Konstantin Sonin. "Coalition formation in non-democracies." The Review of Economic Studies 75.4 (2008): 987-1009. Francois, P., Rainer, I., & Trebbi, F. (2015). How is power shared in Africa?. Econometrica, 83(2), 465-503.
  • Section 4. (a). ii. Political transitions
    Reading: * Acemoglu, Daron, and James Robinson (2006), Ch. 5, 6, 7 Ross, M. 2006. \Is Democracy Good for the Poor?" American Journal of Political Science 50(4): 860-874. Papaioannou, Elias and Gregorios Siourounis (2008) "Democratisation and Growth," Economic Journal, 118(532), 1520-1551. Persson, Torsten and Guido Tabellini (2009) \Democratic Capital: The Nexus of Political and Economic Change," American Economic Journal: Macroeconomics, 1(2), 88{126. Acemoglu, Daron (2008) \Oligarchic Vs. Democratic Societies," Journal of the European Economic Association, 6 (1), 1{44. * Acemoglu, Daron, Simon Johnson, James A. Robinson, and Pierre Yared (2008) \Income and Democracy," American Economic Review, 98 (3), 808{842. * Kudamatsu, M. 2012. \Has democratization reduced infant mortality in sub-Saharan Africa? Evidence from micro data." Journal of the European Economic Association 10(6): 1294-1317.
  • Section 4. (a). iii. State capacity
    Reading: * Besley, Timothy, and Torsten Persson. "The origins of state capacity: Property rights, taxation, and politics." American Economic Review 99.4 (2009): 1218-44. Acemoglu, Daron, Davide Ticchi, and Andrea Vindigni. \A theory of military dictatorships." American Economic Journal: Macroeconomics 2.1 (2010): 1-42. * Acemoglu, Daron, Camilo Garcia-Jimeno, and James A. Robinson. \State capacity and economic development: A network approach." American Economic Review 105.8 (2015): 2364-2409. * Gennaioli, Nicola, and Hans-Joachim Voth. "State capacity and military con ict." The Review of Economic Studies 82.4 (2015): 1409-1448. Muralidharan, K., Niehaus, P., & Sukhtankar, S. 2016. \Building State Capacity: Evidence from Biometric Smartcards in India. American Economic Review 106(10): 2895-2929.
  • Section 4. (b) Civil Wars and Ethnic Con ict
    Reading: Fearon, J. D. and D. D. Laitin (2003). \Ethnicity, Insurgency, and Civil War," American Political Science Review, 97, 75{90. Collier, Paul, and Anke Hoeer. "Greed and grievance in civil war." Oxford economic papers 56.4 (2004): 563-595. * Miguel, E., S. Satyanath, and E. Sergenti (2004): \Economic Shocks and Civil Con ict: An Instrumental Variables Approach," Journal of Political Economy, 112, 725{753. * Montalvo, Jose G., and Marta Reynal-Querol. "Ethnic polarization, potential con ict, and civil wars." American economic review 95.3 (2005): 796-816. * Arbatli, C. E., Ashraf, Q. H., Galor, O., & Klemp, M. (2018). Diversity and Con ict, forthcoming in Econometrica. * Blattman, Christopher, and Edward Miguel. \Civil War." Journal of Economic Literature 48.1 (2010): 3-57. Blattman, Christopher, and Jeannie Annan. 2015. \Can Employment Reduce Lawlessness and Rebellion? A Field Experiment with High-Risk Men in a Fragile State." American Political Science Review 110(1). Bazzi, S. and C. Blattman (2014). "Economic Shocks and Con ict: Evidence from Commodity Prices". American Economic Journal: Macroeconomics, 6, 1{38. Bellows, J. and E. Miguel (2009): "War and Local Collective Action in Sierra Leone," Journal of Public Economics, 93, 1144{1157. * Dube, O. and J. F. Vargas (2013). "Commodity Price Shocks and Civil Con- ict: Evidence from Colombia," Review of Economic Studies, 80, 1384{1421. * Esteban, J., L. Mayoral, and D. Ray (2012). \Ethnicity and Con ict: An Empirical Study," American Economic Review, 102, 1310{1342.
Assessment Elements

Assessment Elements

  • non-blocking 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.
  • non-blocking Short essay assignment
    In short essays you will be answering either specic questions about particular readings or be commenting on more open ended questions that ask you to provide a synthesis of multiple related papers. The goal of these essays is to assess your ability to grasp the ideas and results presented in papers you will be reading throughout the course and your ability to formulate the connections and contrasts between dierent studies.
  • non-blocking 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.
  • non-blocking Attendance
    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.
  • non-blocking 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.
  • non-blocking Short essay assignment
    In short essays you will be answering either specic questions about particular readings or be commenting on more open ended questions that ask you to provide a synthesis of multiple related papers. The goal of these essays is to assess your ability to grasp the ideas and results presented in papers you will be reading throughout the course and your ability to formulate the connections and contrasts between dierent studies.
  • non-blocking 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.
  • non-blocking Attendance
    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

Interim Assessment

  • Interim assessment (3 module)
    0.45 * 2 problem sets + 0.1 * Attendance + 0.25 * Long take-home essay + 0.2 * Short essay assignment
Bibliography

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