PSC 564: Comparative Political Economy

M. A. Kayser, Asst. Prof.

Dept. of Political Science

University of Rochester

Fridays, 10:00-12:30, H329

mark.kayser@rochester.edu

Fall 2005

 

This course offers a broad introduction to recent research in comparative political economy.  More specifically, we will study how politics and the economy interact.  The first half of the semester is dedicated to the question of how various political institutions, processes, and events affect economic policy and outcomes; the second half focuses on the converse, how the economy and interests influence the development of institutions and politics.  The tradeoff for the breadth of this course is that few articles can be assigned on any given topic.  My purpose, however, is to introduce you to the seminal and current ideas within CPE and to help you identify research opportunities that you can then pursue in your own work.

 

Students will be evaluated on four components: weekly 1-2 page critical responses to the readings (20%), occasional short presentations of weekly topics (20%), participation in discussions (10%), and a short 10-12 page original research proposal  (50%).  The weekly responses should be emailed to me by 5PM the day before class.  Please not that these are NOT reading summaries, rather a critical evaluation of the arguments.  The number of presentations expected of each student will depend on the class enrollment.  Students will divide the weekly topics between them and one or two students will introduce the readings each week.  The use of powerpoint or the overhead projector transparencies is strongly encouraged.  Presentations should not exceed 15 minutes.  The research proposal, to be presented in the last class and turned in to me on the last day of the exam period, is primarily intended to identify a substantively important research opportunity within CPE and to present a plan for how it can be developed and tested.  This is a proposal, not a paper and will therefore be evaluated on substantive importance, connection to the literature, and plausibility.  Students are expected to discuss their research proposal with my by week 9 of the semester. 

 

I do not require the purchase of any books.  This syllabus may change during the semester!

 

Optional Books: 

Acemoglu & Robinson (Forthcoming). Economic Origins of Dictatorship and Democracy: Economic and Political Origins.  CUP.

Alesina, Cohen, Roubini.  1997.  Political Cycles and the Macroeconomy.  MIT Press.

            Boix. 1998.   Political Parties, Growth, and Equality.  Cambridge UP.

            Persson & Tabellini. 2003. The Economic Effects of Constitutions.  MIT Press.

            Przeworski, Alvarez, Cheibub, Limongi. 2000. Democracy and Development. Cambridge

 

 

Office Hours:  Mondays 3:00-5:00, Harkness 320B, or by appointment.

 

PART I: Political Effects on the Economy (Weeks 2 to 9)

 

2.       Income (Re)distribution

a.       Atkinson. 2003. Income Inequality in OECD Countries: Data and Explanations. CESifo Economic Studies 49(4).

b.       Meltzer & Richard. 1981. A Rational Theory of the Size of Government.  J. Pol. Economy 89: 914-27. (Read for the work-horse model).

c.       Iversen and Soskice. 2004. Electoral Systems, Parties and the Politics of Class:  Why Some Democracies Redistribute More than Others.  Unpublished Ms.

d.       Birchfield & Crepaz.  1998.  The Impact of Constitutional Structures and Collective and Competitive Veto Points on Income Inequality in Industrialized Democracies.  EJPR 34: 175-

Recommended:

e.       Bartels.  2003.  Partisan Politics and the U.S. Income Distribution. 

f.        Austen-Smith.  2000.  Redistributing Income under Proportional Representation.  JPE 108: 1235-1269.

g.       Acemoglu & Robinson.  2001.  Inefficient Redistribution.  APSR 95: 649-61.

h.       Lindert. Three Centuries of Inequality in Britain and America. In Atkinson and Bourguignon, eds., Handbook of Income Distribution, Vol. 1.

i.         Moene & Wallerstein. 2001. Inequality, Social Insurance and Redistribution.  APSR 95: 859-74.

j.         Bradley, Huber, Moller, Nielsen, and Stephens. 2003.  Distribution and Redistribution in Post-Industrial Democracies.  World Politics 55: 193-228.

k.       Atkinson & Bourguignon, eds.  Handbook of Income Distribution.

l.         Atkinson, Rainwater, & Smeeding. 1995. Income Distribution in OECD Countries: Evidence from the Luxembourg Income Study. OECD.

m.     Kuznets, Simon. 1955. Economic Growth and Income Inequality.  AER 45: 1-28.

 

3.       The Size of Government

a.       Persson & Tabellini. 2003. The Economic Effects of Constitutions. skim ch. 1, 2, read ch. 9.

b.       Franzese.  2002. Macroeconomic Policies of Developed Democracies. Ch. 2.

c.       Milesi-Ferretti, Perotti, and Rostagno.  2002.  Electoral Systems and the Composition of Public Spending.  QJE: 609-

d.       Alesina, Glaeser, and Sacerdote.  2001. Why Doesn’t the United States Have a European-Style Welfare State?  Brookings Papers on Economic Activity 2001: 187-254.

Recommended:

e.       Acemoglu. 2005. Constitutions, Politics and Economics (Review Essay).  JEL, Forthcoming.

f.        Grossman and Helpman.  1996. Electoral Competition and Special Interest Politics.  Review of Economic Studies 63: 256-86.

g.       Hicks & Swank.  1992.  Politics, Institutions, and Welfare Spending in Industrialized Democracies, 1960-82.  APSR 86: 658-674.

h.       Tiebout.  1956.  A Pure Theory of Local Expenditures.  JPE 64: 416-24.

i.         Lindert. 2004. Growing Public. CUP.

j.         Swank & Stienmo.  2002.  The New Political Economy of Taxation in Advanced Capitalist Democracies.  AJPS 46: 642-55.

Note the related literatures on Fiscal Federalism, Public Debt, Central Bank Independence, and Macroeconomic Management in General.

k.       Rodden & Wibbels. 2002. Beyond the Fiction: Macroeconomic Management in Multitiered Systems.  World Politics 54: 494-531.

l.         Persson, Tabellini, and Roland.  2000.  Comparative Politics and Public Finance.  JPE 108: 1121-61

m.     Triesman. 2000.  Decentralization and Inflation: Commitment, Collective Action, or Continuity?  APSR 94: 837-57.

n.       Lohmann.  1998.  Federalism and Central Bank Independence: The Poltics of German Monetary Policy, 1957-92.  World Politics 50.3: 401-46.

o.       Franzese. 2002. Macroeconomic Policies of Developed Democracies.

 

4.       Consumers v. Producers: Trade Openness, Protection, & Regulation

a.       Alt, Frieden, Gilligan, Rodrik, and Rogowski.  1996.  The Political Economy of International Trade – Enduring Puzzles and an Agenda for Enquiry.  CPS 29.6: 689-717.

b.       Karol.  2003.  Not the Size of the District but the Size of the Job: Explaining Inter-cameral Differences on U.S. Trade Policy.  Ms. UC Berkeley.

c.       Grossman & Helpman.  2004. A Protectionist Bias in Majoritarian Politics.  NBER Working Paper No. 11014.

d.       Rogowski & Kayser.  2002.  Majoritarian Electoral Systems and Consumer Power: Price-level Evidence from the OECD Countries.  AJPS 46: 526-39.

Recommended:

e.       McGillivray.  1997.  Party Discipline as a Determinant of the Endogenous Formation of Tariffs.  AJPS 41: 584-607.

f.        Grossman & Helpman.  1994. Protection for Sale.

g.       Hiscox.  2001.  Class versus Industry Cleavages: Inter-Industry Factor Mobility and the Politics of Trade.  IO.

h.       Lohmann & O’Halloran. 1994.  Divided Government and U.S. Trade Policy. IO 48: 595-632.

i.         Karol.  2000.  Divided Government and US Trade Policy: Much Ado about Nothing? IO 54: 825-44.

j.         Reinhardt & Busch. 1999. Industrial Location and Protection: The Political and Economic Geography of US Non-tariff Barriers.  AJPS 43.4: 1028-50.

k.       Rogowski.  2002.  Trade and Representation: How Diminishing Geographic Concentration Augments Protectionist Pressures in the U.S. House of Representatives.  In Shaped by War and Trade, Katznelson & Shefter, eds.  Princeton UP. 

l.         Scheve and Slaughter.  2001.  What Determines Individual Trade Policy Preferences?  J. of Int’l Econ. 54: 267-92.

m.     Mayda & Rodrik.  2001. Why are Some People (and Countries) More Protectionist than Others? NBER Working Paper 8641.

 

5.       Rent Seeking, Corruption, and Competition

a.       Kunicova and Rose-Ackerman.  2005. Electoral Rules as Constraints on Corruption.  BJPS 35(4): 573-606.

b.       Montinola & Jackman.  2002.  Sources of Corruption: A Cross-country Study.  BJPS 32: 147-70.

c.       Besley & Case.  1995.  Does Electoral Accountability Affect Economic-Policy Choices? Evidence from Gubernatorial Term Limits.  QJE 110: 769-798.

d.       Tsebelis. 1993. Penalty and Crime: Further Theoretical Considerations and Empirical Evidence. JTP 5: 349-74. (just for fun).

Recommended:

e.       Andrews and Montinola. 2004. Veto Players and the Rule of Law in Emerging Democracies.  CPS 37(1): 55-87.

f.        Acemoglu and Verdier.  2000.  The Choice Between Market Failures and Corruption.  AER 90: 194-211.

g.       Chang and Golden. 2005. Electoral Systems, District Magnitude and Corruption.  BJPS, Forthcoming.

h.       Chang. 2005. Electoral Incentives for Political Corruption under Open-List Proportional Representation. JOP, Forthcoming.

i.         Tsebelis 1990. Penalty Has No Impact on Crime: A Game Theoretic Analysis. Rationality and Society 2: 255-86.

j.         Hirshleifer and Rasmusen. 1992.  Are Equilibrium Strategies Unaffected by Incentives? JTP 4: 343-67.

k.       Persson, Tabellini, and Trebbi.  2003.  Electoral Rules and Corruption.  Journal of the European Econ. Association 1, 958-89.

l.         Alt and Lassen.  2003.  The Political Economy of Institutions and Corruption in American States.  J. of Theoretical Politics 15: 341-65.

m.     Mauro. 1995. Corruption and Growth.  QJE 110.3:681-712.

n.       Triesman. 2000.  The Causes or Corruption: A Cross-National Study.  J. of Public Economics 76: 399-457.

o.       Lederman, Loayza, Soares. 2001. Accountability and Corruption: Political Institutions Matter.  World Bank Working Paper 2708.

p.       Gerring and Thacker.  Forthcoming. Political Institutions and Corruption: The Role of Unitarism and Parliamentarism.  BJPS.

q.       Krueger. 1974.  The Political Economy of the Rent-Seeking Society. AER 64: 291-303.

r.        Tavits. 2005. Causes of Corruption: Testing Competing Hypotheses. Nuffield Working Paper 2005-W3.

s.       Bardhan. 1997. Corruption and Development: A Review of Issues. JEL 35: 1320-46.

 

  1. Economic Growth I: Theory and Empirics
    1. Barro and Sala-i-Martin.  Economic Growth. Ch. 1.
    2. Pritchet, Lant. 1997. Divergence, Big Time. J. Econ. Perspectives 11: 3-17
    3. Lucas.  1990. Why Doesn’t Capital Flow from Rich to Poor Countries?  AER 80: 92-96.
    4. Keefer, Phillip. 2004. What Does Political Economy Tell Us about Economic Development – and Vice Versa? Annual Review of Political Science.

Recommended:

    1. Rodrik, Subramian, & Trebbi. 2002. Institutions Rule: the Primacy of Institutions over Geography and Integration in Economic Development.  NBER Working Paper 9305.
    2. Romer. 1994.  Origins of Endogenous Growth.  J. Econ. Perspectives 8: 3-22.
    3. Hibbs. 2001. The Politicization of Growth Theory. Kyklos 54: 265-86.
    4. Acemoglu and Robinson.  2000.  Political Losers as a Barrier to Economic Development.  AER 90: 126-130.
    5. DeSoto. 2000.  The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else.
    6. Przeworksi and Limongi. 1993. Political Regimes and Economic Growth.  Journal of Economic Perspectives 7(3): 51-69.
    7. Robinson, Torvik, and Vedier. 2002.  Political Foundations of the Resource Curse.  CEPR Discussion Paper No. 3422.
    8. Sachs and Warner. 2001.  The Curse of Natural Resources.  European Economic Review 45: 827-38.
    9. Barro.  Determinants of Economic Growth: A Cross-Country Empirical Study.  Ch. 1-2.

n.       Feldstein &  Horioka. 1980. Domestic Savings and International Capital Flows.  Economic Journal 90: 314-329.

o.       Weingast.  1995.  The Economic Role of Political Institutions – Market-preserving Federalism and Economic Development.  J. of Law, Economics, and Organization 11.1: 1-31.

    1. North.  1991.  Institutions.  J. Econ. Perspectives 5: 97-112.
    2. Alesina, Ozler, Roubini, & Swagel. 1996.  Political Instability and Economic Growth.  Journal of Economic Growth 1: 189-211.
    3. Collier and Gunning. 1999.  Why has Africa Grown Slowly?  J. Econ. Perspectives 13: 3-22.
    4. Easterly. 2002. The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics.

 

  1. Economic Growth II:  The Longer View
    1. Hibbs and Olsson. 2005. Biogeography and Long-Run Economic Development. European Economic Review 49: 909-938.
    2. Acemoglu, Johnson, & Robinson. 2002. Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution.  QJE 117.4: 1231-94.
    3. Acemoglu, Robinson and Johnson.  2001. Colonial Origins of Comparative Development: An Empirical Investigation.  AER 91: 1369-1401.
    4. Niall Fergusson.  2003.  British Imperialism Revisited: The Costs and Benefits of ‘Anglobalization’  NYU Development Research Institute Working Paper Series: 2003-02.

Recommended

    1. Bairoch. 1995. Economics and World History: Myths and Paradoxes.
    2. Jared Diamond.  1999. Guns, Germs, and Steel: The Fates of Human Societies. 
    3. Lal.  1998.  Unintended Consequences: Impact of Factor Endowments, Culture, and Politics on Long-Run Economic Performance. MIT Press.
    4. Gerschenkron.  1962.  Economic Backwardness in Historical Perspective.  Harvard UP. 
    5. Bockstette, Chanda, & Putterman. 2002. States and Markets: The Advantage of an Early Start.  Journal of Economic Growth 7: 347-369.
    6. Engerman and Sokoloff. 2000. History Lessons: Institutions, Factor Endowments, and Paths of Development in the New World.  JEP 14.3: 217-32.
    7. Acemoglu and Johnson.  2005. The Rise of Europe: Atlantic Trade, Institutional Change and Growth.  AER.

 

  1. Wage Setting, Corporatism and “Varieties of Capitalism”
    1. Molina and Rhodes.  2002.  Corporatism: The Past, Present, and Future of a Concept.  Annual Review of Political Science 5: 305-31.
    2. Calmfors & Driffill. 1988.  Bargaining Structure, Corporatism, and Macroeconomic Performance.  Economic Policy 6: 14-61.
    3. Rueda and Pontusson. 2000. Wage Inequality and Varieties of Capitalism.  World Politics 52(3): 350-383.
    4. Swenson. 2002. Capitalists against Markets: The Making of Labor Markets and Welfare States in the United States and Sweden.

Recommended

    1. Esping-Anderson. 1990. The Three Worlds of Welfare Capitalism.

 

9.       Electoral and Partisan Cycles

a.       Persson & Tabellini. 2002. Do Electoral Cycles Differ across Political Systems? Ms.

b.       Suzuki.  1992.  Political Business Cycles in the Public Mind.  APSR 86: 989-96.

c.       Kayser.  2005.  Who Surfs, Who Manipulates? The Determinants of Opportunistic Election Timing and Electorally Motivated Economic Intervention.  APSR 99(1) 17-27.

d.       Boix. 2000. Partisan Governments, the International Economy, and Macroeconomic Polices in Advanced Nations, 1960-93. World Politics 53(1): 38-73.

Recommended:

e.       Alesina, Roubini, Cohen.  Chapters 2 (read), 4 (skim) & 6 (6.1, 6.2, 6.7 – 6.9).

f.        Rogoff.  1990.  Equilibrium Political Budget Cycles.  AER 80: 21-36.

g.       Tufte.  1979.  Political Control of the Economy.  Princeton UP.

h.       Franzese.  2002.  Electoral and Partisan Cycles in Economic Policies and Outcomes.  Annual Review of Political Science 5: 369-421.

i.         Alesina, Cohen, Roubini.  1997.  Political Cycles and the Macroeconomy.  MIT. (only stuff on partisan cycles) Ch.  3, 7.

j.         Hibbs.  1977.  Political Parties and Macroeconomic Policy.  APSR 71: 1467-87.

k.       Schultz.  1995.  The Politics of the Political Business Cycle.  BJPS 25: 79-99.

 

PART II: Economic Effects on Politics (Weeks 10 to 15)

10.   The Economy and the Vote

a.       Paldam. 1991. How Robust is the Vote Function? A Study of Seventeen Nations Over Four Decades.  In Economics and Politics: The Calculus of Support. Ann Arbor: University of Michigan Press.

b.       Powell & Whitten. 1993.  A Cross-National Analysis of Economic Voting – Taking Account of the Political Context.  AJPS 37: 391-414.

c.       Hellwig. 2001. Interdependence, Government Constraints and Economic Voting. JOP 63: 1141-62.

d.       Stevenson.  2001. The Economy and Policy Mood: A Fundamental Dynamic of Democratic Politics? AJPS 45(3): 620-33.

Recommended

e.       Kayser and Wlezien.  Performance Pressure: Patterns of Partisanship and the Economic Vote.  Ms. University of Rochester.

f.        Achens and Bartels. 2004. Blind Retrospection: Electoral Responses
to Drought, Flu and Shark Attacks. Ms. Princeton.

g.       Bartels. Economic Inequality and Political Representation.

h.       Lewis Beck & Stegmaier.  2000. Economic Determinants of Election Outcomes. Annual Review of Political Science 3: 183-219.

i.         Zaller 2004.  Floating Voters.

 

11.   Endogenous Institutions

a.       Boix.  1999. Setting the Rules of the Game: The Choice of Electoral Systems in Advanced Democracies.  APSR 93.3: 609-24.

b.       Rogowski and MacRae. 2004. Inequality and Institutions: What Theory, History, and (Some) Data Tell Us.  Ms. UCLA.

c.       Cusack, Iversen, Soskice. 2004. Specific Interests and the Origins of Electoral Institutions.  Ms. Harvard.

d.       North and Weingast. 1989.  Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth Century England.  J. of Economic History 49: 803-32.

Recommended:

e.       Rogowski. 1987.  Trade and the Variety of Democratic Institutions.   IO 41: 203-23.

f.        Iversen and Soskice.  2001. An Asset Theory of Social Policy Preferences.  APSR 95: 875-893. (or assign below?)

g.       Swenson.  1991.  Bringing Capital Back In, or Social Democracy Reconsidered.  World Politics 43: 513-544. (Think Belassa-Samuelson!)

h.       North. 1981.  Structure and Change in Economic History.  Norton.

i.         Boix.  2001.  Democracy, Development, and the Public Sector.  AJPS 45: 1-17.

j.         Ross, Michael. 1999. The Political Economy of the Natural Resource Curse.  World Politics 51.2 (Review Article).

 

12.   Democratization

a.       Londregan and Poole. 1996.  Does High Income Promote Democracy?  World Politics 49: 1-30.

b.       Przeworski and Limongi.  2000.  Modernization: Theory and Facts.  World Politics 49(2): 155-83.

c.       Boix and Stokes.  Endogenous Democratization.  World Politics 55(4): 517-49.

d.       Ross, Michael. 2001. Does Oil Hinder Democracy? World Politics 53: 325-61.

Recommended:

    1. Acemoglu and Robinson. 2000.  Why did the West Extend the Franchise?  Democracy, Inequality, and Growth in Historical Perspective.  QJE 115: 1167-99.

f.        Helliwell.  1994.  Empirical Linkages Between Democracy and Economic Growth.  BJPS 24: 225-248.

g.       Muller.  Economic Determinants of Democracy 966-982.

h.       Barro.  1999.  Determinants of Democracy.  J. Pol. Economy.

Also note the extensive literature on reform:

i.         Przeworski 1991. Democracy and the Market: Political and Economic Reforms in Eastern Europe and Latin America.  Ch. 4  (J-curve)

j.         Hellman.  1998.  Winners Take All: The Politics of Partial Reform in Postcommunist Transitions.  World Politics 50: 203-

k.       Geddes.  1991.  A Game-Theoretic Model of Reform in Latin-American Democracies.  APSR 85.2: 371-92.

l.         Triesman. 1999. Political Decentralization and Economic Reform: A Game-theoretic Analysis.  AJPS 43: 488-517.

m.     Stone. 2002.  Lending Credibility: The IMF and the Post-Communist Transition. PUP.

n.       Acemoglu. 2003. Persistence of Inefficient Institutions

o.       Bunce.  2001.  Democratization and Economic Reform.  Annual Review of Political Science 4: 43-65.

 

13.   Consequences of Globalization I: Winners, Losers, and Politics

a.       Williamson.  1998. Globalization, Labor Markets and Policy Backlash in the Past.  JEP 12.4: 51-72 (Symposium: Globalization in Perspective).

b.       Rogowski.  1987.  Political Cleavages and Changing Exposure to Trade. APSR 81.4: 1121-37.

c.       Hiscox. 2002. Commerce, Coalitions, and Factor Mobility: Evidence from Congressional Votes on Trade Legislation. APSR 96: 593-608.

d.       Rodrik, Dani. 1998. Why Do More Open Countries have Bigger Governments? JPE 106.5: 997-1032.

Recommended:

e.       Leamer.  1996.  Wage Inequality from International Competition and Technological Change.  AER 86: 309-314.

f.        Alesina & Wacziarg. 1998. Openness, Country Size and Government. Journal of Public Economics 69: 305-21.

g.       Rodrik.  1997. Has Globalization Gone too Far? Institute for International Economics. Ch. 2.

h.       Krugman & Obstfeld. Ch. 4 (Resources and Trade: The Heckscher-Ohlin Model)

    1. Freeman.  1995.  Are Your Wages Set in Beijing?  Journal of Economic Perspectives 9.3: 15-32.

j.         Lindert and Williamson.  Forthcoming.  Does Globalization Make the World More Unequal?  In NBER, Globalization in Historical Perspective. 

k.       Cline. 1999.  Trade and Income Distribution: The Debate and New Evidence.  IIE Policy Brief 99-7.

l.         Frankel and Romer. 1999.  Does Trade Cause Growth?  AER 89: 379-99. (but see institutions argument in Rodrik, Subramian & Trebbi. 2002. Ms.)

 

14.   Consequences of Globalization II: Convergence? Divergence? Fragmentation?

a.       Alesina, Spolaore, and Wacziarg. 2000. Economic Integration and Political Disintegration.  AER 90: 1276-96.

b.       Boix. 1998.  Political Parties, Growth and Equality.  Cambridge UP.  Introduction & Ch. 1.

c.       Kayser. 2006.  Trade and the Timing of Elections.  BJPS (Forthcoming).

d.       Hallerberg.  1996.  Tax Competition in Wilhemine Germany and Its Implications for European Union.  World Politics 48: 324-

Recommended:

e.       Oatley. 1999.  How Constraining is Capital Mobility?  The Partisan Hypothesis in the Open Economy. AJPS 43.4: 1003-27.

    1. Rogowski. 2003. International Capital Mobility and National Policy Divergence. In Kahler and Lake, eds., Governance in a Global Economy. PUP.
    2. Garrett.  1998. Global Markets and National Politics: Collision Course or Virtuous Circle?  International Organization 52.4

h.       Alesina and Spolaore.  Forthcoming.  The Size of Nations.  MIT Press.

i.         Li and Reuveny.  2003.  Economic Globalization and Democracy: An Empirical Analysis.  Ms.  Pennsylvania State University / Indiana University.

j.         Katzenstein.  1985.  Small States in World Markets. Cornell UP.  Ch. 2.

k.       Frieden. 1991. Invested Interests: the Politics of National Economic Policies in a World of Global Finance.  IO 45: 425-51.

l.         Rodrik. 1997.  Has Globalization Gone too Far? Ch. 3.

m.     Clark & Reichert.  1998.  International and Domestic Constraints on Political Business Cycles in OECD Economies.  IO.

 

15.   RESEARCH PRESENTATIONS