General Books
The main book for the class is:
Persson, Torsten, and Guido Tabellini. Political Economics: Explaining Economic Policy. Cambridge, MA: MIT Press, 2002. ISBN: 9780262661317. (Referred to as PT in the table below.)
The reading list gives the corresponding sections in PT. Also good to read:
Austen-Smith, David, and Jeffrey S. Banks. Positive Political Theory I: Collective Preference. Ann Arbor, MI: University of Michigan Press, 2000, ISBN: 9780472087211.
Buchanan, James M., and Gordon Tullock. The Calculus of Consent: Logical Foundations of Constitutional Democracy. Ann Arbor, MI: University of Michigan Press, 1962. ISBN: 9780472061006.
Grossman, Gene M., and Elhanan Helpman. Special Interest Politics. Cambridge, MA: MIT Press, 2002. ISBN: 9780262571678.
Mueller, Dennis C. Public Choice II. Rev. ed. Cambridge, UK: University of Cambridge Press, 1989. ISBN: 9780521379526.
Readings by Session
Note: non-starred readings may be used for political economy paper topics. Some sessions are marked as optional; they were omitted in the Fall 2008 version of this course, but are provided here for reference.
| LEC # | TOPICS | READINGS |
|---|---|---|
| I. Basic one-dimensional electoral competition | ||
| 1 | General framework |
*PT. Sections 2.2.1, 2.2.2, 3.1-3.3, 5.1, and 5.2. *Hotelling, Harold. "Stability in Competition." Economic Journal 39 (1929): 41-57. *Downs, Anthony. An Economic Theory of Democracy. New York, NY: Addison-Wesley, 1997. ISBN: 9780060417505. Black, Duncan. The Theory of Committees and Elections. New York, NY: Springer-Verlag, 1986. ISBN: 9780898381894. *Roberts, Kevin W. S. "Voting Over Income Tax Schedules." Journal of Public Economics 8 (1977): 329-340. *Calvert, Randall L. "Robustness of the Multidimensional Voting Model: Candidate Motivations, Uncertainty, and Convergence." American Journal of Political Science 29 (1985): 69-95. *Alesina, Alberto. "Credibility and Policy Convergence in a Two-Party System with Rational Voters." American Economic Review 78 (1988): 796-805. Dixit, Avinash, Gene M. Grossman, and Faruk Gul. "The Dynamics of Political Compromise." Journal of Political Economy 108 (2000): 531-568. Myerson, Roger B. "Analysis of Democratic Institutions: Structure, Conduct and Performance." Journal of Economic Perspectives 9 (1995): 77-89. |
| 2 | Applications: public goods and size of government |
*PT. Section 6.1. Bergstrom, Theodore C., and Robert P. Goodman. "Private Demands for Public Goods." American Economic Review 63 (1973): 280-296. Romer, Thomas, and Howard Rosenthal. "The Elusive Median Voter." Journal of Public Economics 12 (1979): 143-170. |
| 3 | Applications: taxation and income redistribution |
*PT. Section 14.1. Meltzer, Allan H., and Scott F. Richard. "A Rational Theory of the Size of Government." Journal of Political Economy 89 (1981): 914-927. Persson, Torsten, and Guido Tabellini. "Is Inequality Harmful for Growth?" American Economic Review 84 (1994): 600-621. Alesina, Alberto, and Dani Rodrik. "Distributive Politics and Economic Growth." Quarterly Journal of Economics 109 (1994): 465-490. |
| 4 | Applications: macroeconomic policy |
*PT. Section 16.2. Alesina, Alberto. "Macroeconomic Policy in a Two-Party System as a Repeated Game." Quarterly Journal of Economics 102 (1987): 651-678. Alesina, Alberto, John Londregan, and Howard Rosenthal. "A Model of the Political Economy of the United States." American Political Science Review 87 (1993): 12-33. |
| II. Multiparty competition and comparative electoral systems | ||
| 5-7 | Multiparty competition and comparative electoral systems |
*Cox, Gary W. "Centripetal and Centrifugal Incentives in Electoral Systems." American Journal of Political Science 34 (1990): 903-35. *Palfrey, Thomas R. "Spatial Equilibrium with Entry." The Review of Economic Studies 51 (1984): 139-156. *Myerson, Roger B., and Robert J. Weber. "A Theory of Voting Equilibria." American Political Science Review 87 (1993): 102-114. *Weber, Shlomo. "On Hierarchical Spatial Competition." Review of Economic Studies 59 (1992): 407-425. *Besley, Timothy, and Stephen Coate. "An Economic Model of Representative Democracy." Quarterly Journal of Economics 112 (1997): 85-114. |
| III. Elections with imperfect information | ||
| 8 | Learning by voters |
*McKelvey, Richard D., and Peter C. Ordeshook. "Sequential Elections with Limited Information." American Journal of Political Science 29 (1985): 480-512. ———. "Elections with Limited Information: A Fulfilled Expectations Model Using Contemporaneous Poll and Endorsement Data as Information Sources." Journal of Economic Theory 36 (1985): 55-85. Feddersen, Timothy, and Wolfgang Pesendorfer. "Voting Behavior and Information Aggregation in Elections with Private Information." Econometrica 65, no. 5 (1997): 1029-1058. Heidhues, Paul, and Johan Lagerlöf. "Hiding Information in Electoral Competition." Games and Economic Behavior 42, no. 1 (2002): 48-74. Schultz, Christian. "The Politics of Persuasion when Voters are Rational." Scandinavian Journal of Economics 97, no. 3 (1995): 357-368. |
| 9 | Agency models |
*PT. Sections 4.4, 9.2, and 16.1. Barro, Robert J. "The Control of Politicians: An Economic Model." Public Choice 14 (1973): 19-42. Ferejohn, John. "Incumbent Performance and Electoral Control." Public Choice 50 (1986): 5-25. Rogoff, Kenneth. "Equilibrium Political Budget Cycles." American Economic Review 80 (1990): 21-37. *Fearon, James. "Electoral Accountability and the Control of Politicians: Selecting Good Types Versus Sanctioning Poor Performance." In Democracy, Accountability, and Representation. Edited by A. Przeworski, Susan C. Stokes, and Bernard Manin. Cambridge, UK; New York, NY: Cambridge University Press, 1999, chapter 2. ISBN: 9780521646161. Myerson, Roger B. "Effectiveness of Electoral Systems for Reducing Government Corruption: A Game Theoretic Analysis." Games and Economic Behavior 5 (1993): 118-132. Duggan, John. "Repeated Elections with Asymmetric Information." Economics and Politics 12 (2000): 109-136. |
| IV. Models of political parties | ||
| 10-11 | Models of political parties |
Aldrich, John H. "A Downsian Spatial Model with Party Activism." American Political Science Review 77 (1983): 974-990. Aldrich, John H. Why Parties?: The Origin and Transformation of Political Parties in America. Chicago, IL: The University of Chicago Press, 1995, chapters 1 and 7. ISBN: 9780226012728. *Snyder, James M., Jr. "Safe Seats, Marginal Seats, and Party Platforms: The Logic of Platform Differentiation." Economics and Politics 6 (1994): 201-213. Roemer, John E. "Why the Poor Do Not Expropriate the Rich: An Old Argument in New Garb." Journal of Public Economics 70 (1998): 399-424. Snyder, James M., Jr., and Michael M. Ting. "An Informational Rationale for Political Parties." American Journal of Political Science 46 (2002): 90-110. Bernhardt, Dan, Larissa Campuzano, and Francesco Squintani. "On the Benefits of Party Competition." ELSE Working Paper No. 122. ESRC Centre for Economic Learning and Social Evolution, London, UK, June 2005. ( |
| V. Multidimensional electoral competition | ||
| 12 | Possibility of a point-valued solution |
*PT. Section 2.3.1. *Plott, Charles R. "A Notion of Equilibrium and Its Possibility Under Majority Rule." The American Economic Review 57 (1967): 787-806. *McKelvey, Richard D. "Intransitivities in Multidimensional Voting Models and Some Implications for Agenda Control." Journal of Economic Theory 12 (1976): 472-482. Patty, John, James M. Snyder, Jr., and Michael M. Ting. 2008. "Two's Company, Three's an Equilibrium: Strategic Voting and Multicandidate Elections." Unpublished paper, July 2008. ( |
| 13 | Set-valued solution concepts |
Feld, Scott L., and Bernard Grofman. "Necessary and Sufficient Conditions for a Majority Winner in n-Dimensional Spatial Voting Games: An Intuitive Geometric Approach." American Journal of Political Science 31 (1987): 709-728. Miller, Nicholas R., Bernard Grofman, and Scott L. Feld. "The Geometry of Majority Rule." Journal of Theoretical Politics 1 (1989): 379-406. *Kramer, Gerald H. "Dynamical Model of Political Equilibrium." Journal of Economic Theory 16 (1977): 310-34. McKelvey, Richard D. "Covering Dominance, and Institution-Free Properties of Social Choice." American Journal of Political Science 30 (1986): 283-314. *Cox, Gary W. "The Uncovered Set and the Core." American Journal of Political Science 31 (1987): 408-422. |
| 13a (optional) | Probabilistic voting models |
Hinich, Melvin J., John O. Ledyard, and Peter C. Ordeshook. "Nonvoting and the Existence of Equilibrium Under Majority Rule." Journal of Economic Theory 4 (1972): 144-153. Coughlin, Peter C., and Shmuel Nitzan. "Electoral Outcomes with Probabilistic Voting and Nash Social Welfare Maxima." Journal of Public Economics 15 (1981): 113-121. |
| 13b (optional) | Structure-induced equilibrium models |
*PT. Section 2.3.2. Shepsle, K. A. "Institutional Arrangements and Equilibrium in Multi-dimensional Voting Models." American Journal of Political Science 23 (1979): 27-59. |
| 14 | Supermajority rules |
*PT. Section 5.3. *Caplin, Andrew, and Barry Nalebuff. "On 64%-Majority Rule." Econometrica 56 (1988): 787-814. |
| VI. Vote-buying, vote-trading, and resource allocation | ||
| 15 | Vote-buying, vote-trading in legislatures |
*Schwartz, Thomas. "The Universal-Instability Theorem." Public Choice 37, no. 3 (1982): 487-501. *Groseclose, Timothy, and James M. Snyder, Jr. "Buying Supermajorities." American Political Science Review 90 (1996): 303-315. Snyder, James M., Jr. "Resource Allocation in Multiparty Elections." American Journal of Political Science 34 (1990): 59-73. |
| 16 | Probabilistic voting models |
*PT. Sections 2.3.2, 3.4, 7.1, 7.4, and chapter 8. Lindbeck, Assar, and Jorgen W. Weibull. "Balanced-Budget Redistribution as the Outcome of Political Competition." Public Choice 52, no. 3 (1987): 273-297. *Dixit, Avinash, and John Londregan. "Redistributive Politics and Economic Efficiency." American Political Science Review 89 (1995): 856-866. ———. "The Determinants of Success of Special Interests in Redistributive Politics." Journal of Politics 58 (1996): 1132-1155. |
| 16a (optional) | "Colonel Blotto" models - cultivating minorities |
Myerson, Roger B. "Incentives to Cultivate Favored Minorities Under Alternative Electoral Systems." American Political Science Review 87 (1993): 856-869. Lizzeri, Alessandro, and Nicola Persico. "The Provision of Public Goods under Alternative Electoral Incentives." American Economic Review 91, no. 1 (2001): 225-239. |
| VII. Interest groups and lobbying | ||
| 17-19 | Interest groups and lobbying |
*PT. Sections 3.5, 7.3, and 7.5.1. *Peltzman, Sam. "Toward a More General Theory of Regulation." Journal of Law and Economics 19, no. 2 (1976): 211-240. Becker, Gary S. "A Theory of Competition Among Pressure Groups for Political Influence." Quarterly Journal of Economics 98 (1983): 371-400. *Grossman, Gene M., and Elhanan Helpman. "Protection for Sale." American Economic Review 84 (1994): 833-850. ———. "Electoral Competition and Special Interest Politics." Review of Economic Studies 63 (1996): 265-286. Dixit, Avinash, Gene M. Grossman, and Elhanan Helpman. "Common Agency and Coordination: General Theory and Application to Government Policy Making." Journal of Political Economy 105 (1997): 752-769. Hirshleifer, Jack. "The Paradox of Power." Economics and Politics 3 (1991): 177-200. Lohmann, Suzanne. "Information, Access, and Contributions: A Signaling Model of Lobbying." Public Choice 85, no. 3-4 (1995): 267-284. *Hall, Richard L., and Alan V. Deardorff. "Lobbying as Legislative Subsidy." American Political Science Review 100, no. 1 (2006): 69-84. Chamon, Marcos, and Ethan Kaplin. "The Iceberg Theory of Campaign Contributions: Political Threats and Interest Group Behavior." Unpublished paper, April 2007. ( |
| VIII. Legislatures | ||
| 20 | Bargaining in legislatures |
*PT. Sections 5.4 and 7.2. *Baron, David P., and John Ferejohn. "Bargaining in Legislatures." American Political Science Review 83 (1989): 1181-1206. *Snyder, James M., Michael M. Ting, and Stephen Ansolabehere. "Legislative Bargaining Under Weighted Voting." American Economic Review 95, no. 4 (2005): 981-1004. ———. "Bargaining in Bicameral Legislatures: When and Why Does Malapportionment Matter?" American Political Science Review 97, no. 3 (2003): 471-481. Jackson, Matthew O., and Boaz Moselle. "Coalition and Party Formation in a Legislative Voting Game." Journal of Economic Theory 103, no. 1 (2002): 49-87. |
| 21 | Coalitions, policies, and government stability |
*PT. Sections 7.5.2, 7.5.3, and 10. Weingast, Barry R., and William J. Marshall. "The Industrial Organization of Congress; or, Why Legislatures, Like Firms, Are Not Organized as Markets." Journal of Political Economy 96, no. 1 (1988): 132-163. Austen-Smith, David, and Jeffrey S. Banks. "Elections, Coalitions, and Legislative Outcomes." American Political Science Review 82 (1988): 405-422. Laver, Michael, and Kenneth A. Shepsle. "Coalitions and Cabinet Government." American Political Science Review 84 (1990): 873-890. Baron, David P. "Government Formation and Endogenous Parties." American Political Science Review 87 (1993): 34-47. *Diermeier, Daniel, and Timothy J. Feddersen. "Cohesion in Legislatures and the Vote of Confidence Procedure on Legislative Bargaining." American Political Science Review 92, no. 3: 611-621. Baron, David P. "Comparative Dynamics of Parliamentary Governments." American Political Science Review 92, no. 3 (1998): 593-610. |
| 22 | Informational vs. distributive theories of legislature |
Shepsle, Kenneth A., and Barry R. Weingast. "The Institutional Foundations of Committee Power." American Political Science Review 81, no. 1 (1987): 85-104. Gilligan, Thomas W., and Keith Krehbiel. "Organization of Informative Committees by a Rational Legislature." American Journal of Political Science 34 (1990): 531-564. Ferejohn, John, and Keith Krehbiel. "The Budget Process and the Size of the Budget." American Journal of Political Science 31 (1987): 296-320. |
| IX. Legislative-executive relations | ||
| 22a (optional) | Legislative-executive relations |
*PT. Section 9.1. Miller, Gary J., and Terry M. Moe. "Bureaucrats, Legislators and the Size of Government." American Political Science Review 77 (1983): 297-322. *Banks, Jeffrey S. "Agency Budgets, Cost Information, and Auditing." American Journal of Political Science 33 (1989): 670-699. *Dixit, Avinash. "Power of Incentives in Private versus Public Organizations." American Economic Review 87 (1997): 378-382. (Papers and Proceedings) McCarty, Nolan M. "Presidential Pork: Executive Veto Power and Distributive Politics." American Political Science Review 94, no. 1 (2000): 117-129. |
| X. Representative vs. direct democracy | ||
| 22b (optional) | Representative vs. direct democracy |
Schultz, Christian. "Information, Polarization and Accountability in Democracy." Unpublished paper, April 2004. ( *Maskin, Eric, and Jean Tirole. "The Politician and the Judge: Accountability in Government." American Economic Review 94, no. 4 (2004): 1034-1054. Alesina, Alberto, and Guido Tabellini. "Bureaucrats or Politicians?" NBER Working Paper No. 10241, January 2004. |
