Formation/Cours

This class will provide an introduction to the field of political economy, a discipline at the intersection of political science and economics that examines economic systems, public policies, and their governance by political agents such as voters, politicians, and policymakers.

The objective is to help students understand how political institutions and social and economic cleavages influence the formulation of public policies on issues such as inequalities, the environment, immigration, trade, and globalization, as well as the political consequences these challenges generate.

The class will draw primarily on neoclassical economics perspectives, methods and sources.

Tentative outline (subject to possible changes). Readings are not mandatory but recommended.

Week 1: What is Political Economy?

• Origins and evolution: Smith, Marx, Keynes

• Politics in economics: institutions, power, and incentives

• Preference aggregation and collective decision-making

• Readings:

  • Rodrik, Dani. Economic Rules, Introduction and Chap. 1.

  • Buchanan, James, and Gordon Tullock (1962). The Calculus of Consent: Logical Foundations of Constitutional Democracy, Ch. 2–3.

Week 2: Institutions and Government

• What are institutions? Formal and informal rules of the game

• Political power and economic resources

• The economic role of government

• Readings:

  • Acemoglu, Daron. Lecture Notes on Political Economy, Part I (non-technical overview).

  • Stiglitz, Joseph. Economics of the Public Sector, Chap. 1.

Week 3: Inequalities

• Trends in wealth and income inequality (global and national perspectives, OECD)

• Political consequences of inequality (redistribution, polarization, populism, elite capture)

• Readings:

  • Piketty, Thomas. Capital in the 21st Century (Introduction + Chap. 1–2).

Week 4: The Welfare State in Comparative Perspective

• Universal vs. targeted models (Esping-Andersen’s “three worlds”; debates on universality)

• New challenges: demographic aging, informality, automation and digitalization

• Readings:

  • Esping-Andersen, Gøsta (1990). The Three Worlds of Welfare Capitalism, Chap. 1–3.

  • Iversen, Torben, and David Soskice (2006). “Electoral Institutions and the Politics of Coalitions: Why Some Democracies Redistribute More than Others.” American Political Science Review.

Week 5: Taxation and Redistribution

• Who pays and who benefits? Progressive vs. regressive systems; fiscal capacity in advanced vs. developing countries

• Tax politics and public opinion (why some taxes are more accepted than others)

• Readings:

  • Meltzer, Allan H., and Scott F. Richard (1981). “A Rational Theory of the Size of Government.” Journal of Political Economy (skim for intuition).

Week 6: Monetary Policy, Sovereign Debt, and Central Bank Politics

• Inflation and credibility (independence vs. accountability of central banks)

• Debt crises and political risk (sovereign default, bailouts, austerity, populism)

• Readings:

  • Fetzer, Timo. “How Austerity Caused Brexit.” American Economic Journal (focus on intuition).

  • Stiglitz, Joseph. “Monetary Policy in a Changing World.” (speech excerpts; non-technical).

Week 7: Globalization and Trade Politics

• Gains from trade and distributional effects (winners vs. losers)

• De-industrialization and political backlash (regional decline, populism, trade wars)

• Readings:

  • Rodrik, Dani. The Globalization Paradox (Intro + Chap. 1, 2, 9).

  • Colantone, Italo, and Piero Stanig (2018). “The Trade Origins of Economic Nationalism.” American Journal of Political Science (focus on intuition).

Week 8: Climate Change and the Political Economy of the Environment

• The political economy of carbon (collective action, free riding, carbon taxes, green subsidies)