Economic Policy

Time and place

Lecture (unisono)

Wednesday

08:00 - 10:00 c.t.
US-A 134/1

There are two rescheduled meetings on Monday, April 8 (16-18) and Monday, June 17 (16-18) instead of Wednesday, June 12 and Wednesday, July 10.

Tutorial (bi-weekly) (unisono)

Monday

16:00 - 18:00 c.t.
US-A 234

The tutorial begins on Monday, April 15. 

News

Content

Introduction

Part I: Social Planner and Efficiency

1. The Role of the State in the Economy

Property Rights, Transaction Costs and Economic Efficiency

2. Traditional View of Economic Policy

3. Social Welfare

Part II: Democratic Economic Policy

1. Aggregation of Preferences

Majority Voting and its Problems

The Median-Voter

2. Economic Policy as a Principal-Agent Problem

Probabilistic Voting

Interest Groups and Bureaucracy

Part III: Implementation of Economic Policy

1. The Golden Rule

2. Targets and Instruments, Assignment

3. Uncertainty

4. Rational Expectations and Time-Consistency

5. Rules vs. Discretion in Economic Policy

Part IV: Partisan Economic Policy

1. Partisan Politics and Distributional Conflicts

Debt and Common Pool-Problems

War-of-Attrition

Tying the Hands of One's Successor 

2. Political Business Cycles

Opprotunistic  Cycles

Ideological Cycles 

Part V: Economic Policy in Practice

Economic Policy Aims: Some Examples

Outline 

Course materials will be provided via Unisono.

• Lecture slides
• Problem sets 

Literature

Acemoglu, Daron (2003) Why Not a Political Coase Theorem?, Journal of Comparative Economics 31, 620-652.

Acocella, Nicola, Giovanni Di Bartolomeo and Andrew Hughes Hallett (2012) The Theory of Economic Policy in a Strategic Context, Cambridge: Cambridge University Press.

Besley, Timothy (2006) Principled Agents? The Political Economy of Good Government, Oxford: Oxford University Press.

Dixit, Avinash (1996) The Making of Economic Policy, Cambridge: MIT-Press.

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

Hillman, Arye (2018) Public Finance and Public Policy, 3rd ed., Cambridge: Cambridge University Press. (You may also use older editions.)

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

North, Douglass C. (1990) A Transaction Cost Theory of Politics, Journal of Theoretical Politics 2, 355-367.

Persson, Torsten and Guido Tabellini (2000) Political Economics: Explaining Economic Policies, Cambridge: MIT-Press.