PSC 564: Comparative
Political Economy
M. A. Kayser, Asst.
Prof.
Dept. of Political
Science
University of
Rochester
mark.kayser@rochester.edu
Fall
2003
This course offers a
broad survey of recent research in comparative political economy. More specifically, we will study how
various political institutions, processes, and events affect economic policy and
outcomes as well as the converse, how economic performance and interests
influence the development of institutions and political outcomes. Unlike some common definitions of
political economy as 1) the application of economic tools to political problems
or 2) the interaction of political and economic structures and forces regardless
of method, this class defines political economy both in substance and
method. We will focus on problems
at the intersection of politics and economics using formal and empirical tools.
Moreover, by focusing on domestic
variation and outcomes, this class also differentiates itself from international political economy which
generally emphasizes international institutions, economic relations, and the
distribution of power. 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 ideas within CPE and to help you identify research
opportunities that you can then pursue in your own work.
Format: Participation in class discussions is a
critical component of this seminar.
Every person is expected to have read all of the required readings for
each week and mentally prepared discussion questions/reactions in advance. Moreover, the responsibility for leading
off discussion with a 10-15 minute presentation on the following week’s readings
will be divided among students every week.
Handouts and/or overheads are very encouraged.
Requirements: Grading
will be based on participation (including performance as discussion-leader) and
on one short (15-20 page) research paper. The paper should identify and develop a
promising research idea that hopefully can be extended after the class. Brief 1-2 page proposals for the
research paper are due near the middle of the semester on a date that I will
announce.
Books: 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
Rodrik.
1997. Has Globalization Gone
Too Far? IIE.
Optional: Franzese, Rodrik, Keohane & Milner, Olson, Bates, Swank, Tufte, Garrett, Hibbs.
Office Hours: Tuesdays 3:00-5:00, Harkness 320B.
Institutional and
Partisan Effects on Policy &
Economic Outcomes (but Not Growth)
1.
Income (Re)distribution
& Size of Government (Week 2)
a.
Meltzer &
Richard. 1981. A Rational Theory of
the Size of Government. J. Pol. Economy 89: 914-27.
b.
Moene & Wallerstein. 2001. Inequality, Social Insurance and
Redistribution. APSR 95:
859-74.
c.
Persson & Tabellini. 2003.
The Economic Effects of Constitutions. ch. 1, 2, 9.
d.
Bartels. 2003. Partisan Politics and the U.S. Income
Distribution.
Recommended:
e.
Acemoglu & Robinson. 2001. Inefficient Redistribution. APSR 95: 649-61.
f.
Austen-Smith. 2000. Redistributing Income under Proportional
Representation. JPE 108:
1235-1269.
g.
Birchfield & Crepaz.
1998. The Impact of
Constitutional Structures and Collective and Competitive Veto Points on Income
Inequality in Industrialized Democracies.
EJPR 34: 175-
h.
Iversen and Soskice. Electoral Systems and the Politics of
Coalitions: Why Some Democracies
Redistribute More than Others.
Unpublished Ms.
i.
Bradley, Huber, Moller, Nielsen, and Stephens. 2003. Distribution and Redistribution in
Post-Industrial Democracies. World
Politics 55: 193-228.
j.
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.
k.
McGillivray. 2003. Redistributive Politics and Stock Price
Dispersion. BJPS 33:
367-95.
l.
Atkinson &
Bourguignon, eds. Handbook of Income
Distribution.
m.
Hicks & Swank. 1992. Politics, Institutions, and Welfare
Spending in Industrialized Democracies, 1960-82. APSR 86: 658-674.
n.
Milesi-Ferretti, Perotti, and Rostagno. 2002. Electoral Systems and the Composition of
Public Spending. QJE:
609-
o.
Tiebout. 1956. A Pure Theory of Local
Expenditures. JPE 64:
416-24.
p.
Grossman and Helpman. 1996.
Electoral Competition and Special Interest Politics. Review of Economic Studies 63:
256-86.
2.
Macroeconomic Management
& Regulation (Week 3)
a.
Alesina, Cohen, Roubini.
1997. Political Cycles and
the Macroeconomy. MIT. (skim) Ch. 3, 7, 9.
b.
Triesman. 2000. Decentralization and Inflation:
Commitment, Collective Action, or Continuity? APSR 94: 837-57.
c.
Rogowski & Kayser. 2002. Majoritarian Electoral Systems and
Consumer Power: Price-level Evidence from the OECD Countries. AJPS 46: 526-39.
Recommended:
d.
Swank & Stienmo.
2002. The New Political
Economy of Taxation in Advanced Capitalist Democracies. AJPS 46: 642-55.
e.
Besley & Case. 1995. Does Electoral Accountability Affect
Economic-Policy Choices? Evidence from Gubernatorial Term Limits. QJE 110: 769-798.
f.
Rodden & Wibbels. 2002. Beyond the Fiction: Macroeconomic Management
in Multitiered Systems. World Politics 54:
494-531.
g.
Hibbs. 1977. Political Parties and Macroeconomic
Policy. APSR 71:
1467-87.
h.
Persson, Tabellini, and Roland.
2000. Comparative Politics
and Public Finance. JPE 108:
1121-61
i.
Diaz-Cayeros, McElwain, Romero, and
Siewierski.
2003. Fiscal Decentralization, Legislative Institutions, and
Particularistic Spending. Ms.
Stanford.
j.
Lohmann. 1998. Federalism and Central Bank Independence:
The Poltics of German Monetary Policy, 1957-92. World Politics 50.3:
401-46.
3.
Trade Openness &
Protection (Week 4)
a.
Lohmann & O’Halloran. 1994.
Divided Government and U.S. Trade Policy. IO 48:
595-632.
b.
Karol. 2000. Divided Government and US Trade Policy:
Much Ado about Nothing? IO 54: 825-44.
c.
Hiscox. 2001. Class versus Industry Cleavages:
Inter-Industry Factor Mobility and the Politics of Trade. IO.
d.
McGillivray. 1997. Party Discipline as a Determinant of the
Endogenous Formation of Tariffs.
AJPS 41: 584-607.
Recommended:
e.
Reinhardt & Busch.
1999. Industrial Location and Protection: The Political and Economic Geography
of US Non-tariff Barriers. AJPS
43.4: 1028-50.
f.
Rogowski. 1987. Trade and the Variety of Democratic
Institutions. IO 41: 203-23.
g.
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.
h.
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.
i.
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.
j.
Scheve and Slaughter. 2001. What Determines Individual Trade Policy
Preferences? J. of Int’l Econ. 54:
267-92.
k.
Mayda & Rodrik. 2001.
Why are Some People (and Countries) More Protectionist than Others? NBER Working
Paper 8641.
4.
Corruption (Week
5)
a.
Persson, Tabellini, and Trebbi.
2003. Electoral Rules
and Corruption. Forthcoming, J.
European Econ. Assoc.
b.
Chang and Golden. 2003.
Electoral Systems, District Magnitude and Corruption. Ms. UCLA.
c.
Acemoglu and Verdier.
2000. The Choice Between
Market Failures and Corruption. AER
90: 194-211.
d.
Montinola & Jackman.
2002. Sources of Corruption:
A Cross-country Study. BJPS 32:
147-70.
Recommended:
e.
Tsebelis Police
Game?
f.
Alt and Lassen. 2003. The Political Economy of Institutions
and Corruption in American States.
J. of Theoretical Politics 15: 341-65.
g.
Mauro. 1995. Corruption
and Growth. QJE
110.3:681-712.
h.
Triesman. 2000. The Causes or Corruption: A
Cross-National Study. J. of Public
Economics 76: 399-457.
i.
Lederman, Loayza, Soares. 2001.
Accountability and Corruption: Political Institutions Matter. World Bank Working Paper
2708.
j.
Gerring and Thacker. Forthcoming. Political Institutions and
Corruption: The Role of Unitarism and Parliamentarism.
BJPS.
k.
Krueger. 1974. The Political Economy of the
Rent-Seeking Society. AER 64: 291-303.
Political &
Institutional Effects on Economic Development &
Growth
Recommended:
j.
Feldstein & Horioka. 1980.
Domestic Savings and International Capital Flows. Economic Journal 90:
314-329.
k.
Weingast. 1995. The Economic Role of Political
Institutions – Market-preserving Federalism and Economic Development. J. of Law, Economics, and Organization
11.1: 1-31.
Recommended:
Elections and the
Economy
1.
The Political Business
(Budget) Cycle (Week 8a)
a.
Alesina, Roubini, Cohen.
Chapters 2 (read), 4 (skim) & 6 (6.1, 6.2, 6.7 –
6.9).
b.
Persson & Tabellini. 2002.
Do Electoral Cycles Differ across Political Systems? Ms.
Recommended:
c.
Rogoff. 1990. Equilibrium Political Budget
Cycles. AER 80:
21-36.
d.
Tufte. 1979. Political Control of the Economy. Princeton UP.
e.
Suzuki. 1994. Evolutionary Voter Sophistication and
Poltical Business Cycles. Public Choice 81.3:
241-61.
f.
Suzuki. 1992. Political Business Cycles in the Public
Mind. APSR 86:
989-96.
g.
Franzese. 2002. Electoral and Partisan Cycles in
Economic Policies and Outcomes.
Annual Review of Political Science 5: 369-421.
h.
Schultz. 1995. The Politics of the Political Business
Cycle. BJPS 25:
79-99.
2.
The Timing of Elections
(& Devaluations). (Week 8b)
a.
Smith. 2003. Election Timing in Majoritarian
Parliaments. BJPS 33:
397-418.
b.
Strom and Swindle.
2002. The Electoral Success of
Strategic Parliamentary Dissolution.
APSR 96: 575-591. (skim)
c.
Frieden, Ghezzi & Stein. 2000. Politics and Exchange Rates: A
Cross-Country Approach to Latin America.
Working Paper R-421.
Inter-American Development Bank, Research Department.
Recommended:
d.
Ito. 1990. The Timing of Elections and Political
Business Cycles in Japan. J. of
Asian Economics 1: 135-56.
e.
Kayser. 2003. Who Surfs, Who Manipulates? The
Determinants of Opportunistic Election Timing and Electorally Motivated Economic
Intervention. Nuffield College
Working Paper 2003-W3.
f.
Chowdhurry. 1993. Political Surfing over Economic Waves:
Parliamentary Election Timing in India.
AJPS 37: 1100-18.
g.
Balke. 1990. The Rational Timing of Parliamentary
Elections. Public Choice 65:
201-216.
h.
Palmer & Whitten.
2000. Government Competence,
Economic Performance, and Endogenous Election Dates. Electoral Studies 19:
413-26.
i.
Roper & Andrews
2003. Impact of the Timing of
Elections on the Party in Government: Canada and Britain, 1940-2000. Ms. Southern Illinois University.
Alternate (earlier?) version.
j.
Stein & Streb. 1999.
Elections and the Timing of Devaluations. Working Paper 396. Inter-American Development Bank,
Research Department.
k.
Powell & Whitten.
1993. A Cross-National Analysis of
Economic Voting – Taking Account of the Political Context. AJPS 37: 391-414.
Economic Effects on
Political & Institutional Development
1.
Economic Origins of
Institutions & the Size of Government (Week 9)
a.
Swenson. 1991. Bringing Capital Back In, or Social
Democracy Reconsidered. World
Politics 43: 513-544. (Think Belassa-Samuelson!)
b.
Iversen and Soskice. 2001. An Asset Theory of Social Policy
Preferences. APSR 95: 875-893. (or
assign below?)
c.
Boix. 1999. Setting the Rules of the Game: The
Choice of Electoral Systems in Advanced Democracies. APSR 93.3: 609-24.
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.
North. 1981. Structure and Change in Economic
History. Norton.
f.
Boix. 2001. Democracy, Development, and the Public
Sector. AJPS 45:
1-17.
g.
Ross, Michael. 1999. The
Political Economy of the Natural Resource Curse. World Politics 51.2 (Review
Article).
2.
Democracy (Week 10)
a.
Przeworski, Alvarez, Cheibub, Limongi. 2000. Democracy and Development. Ch.
2.
b.
Ross, Michael. 2001.
Does Oil Hinder Democracy? World Politics 53: 325-61.
c.
Londregan and Poole. 1996. Does High Income Promote Democracy? World Politics 49:
1-30.
d.
Helliwell. 1994. Empirical Linkages Between Democracy and
Economic Growth. BJPS 24:
225-248.
Recommended:
e.
Muller. Economic Determinants of Democracy
966-982.
f.
Bhagwati. Globalization, Sovereignty, and
Democracy.
g.
Barro. 1999. Determinants of Democracy. J. Pol.
Economy.
h.
Kuznets, Simon. 1955. Economic
Growth and Income Inequality. AER
45: 1-28.
i.
Atkinson, Rainwater,
& Smeeding. 1995. Income Distribution in OECD
Countries: Evidence from the Luxembourg Income Study.
OECD.
3.
Reform (Week
11)
a.
Przeworski 1991. Democracy and the
Market: Political and Economic Reforms in Eastern Europe and Latin America. Ch. 4 (J-curve?)
b.
Hellman. 1998. Winners Take All: The Politics of
Partial Reform in Postcommunist Transitions. World Politics 50:
203-
c.
Geddes. 1991. A Game-Theoretic Model of Reform in
Latin-American Democracies. APSR
85.2: 371-92.
d.
Triesman. 1999. Political
Decentralization and Economic Reform: A Game-theoretic Analysis. AJPS 43: 488-517.
Recommended:
e.
Acemoglu. 2003. Persistence of Inefficient
Institutions
f.
Wibbels. 2003. Bailouts, Budget Constraints, and
Leviathans: Comparative Federalism and Lessons from the Early United States. CPS
36.5: 475-508.
g.
Bunce. 2001. Democratization and Economic
Reform. Annual Review of Political
Science 4: 43-65.
External Economic
Sources of Domestic Politics
1.
Winners and Losers (Week
12)
a.
Leamer. 1996. Wage Inequality from International
Competition and Technological Change.
AER 86: 309-314.
b.
Cline. 1999. Trade and Income Distribution: The
Debate and New Evidence. IIE Policy
Brief 99-7.
c.
Rodrik. 1997. Has Globalization Gone too Far?
Institute for International Economics. Ch. 2.
d.
Rogowski. 1987. Political Cleavages and Changing
Exposure to Trade. APSR 81.4: 1121-37.
Recommended:
e.
Krugman & Obstfeld. Ch. 4 (Resources and Trade: The Heckscher-Ohlin Model)
g.
Lindert and Williamson. Forthcoming. Does Globalization Make the World More
Unequal? In NBER, Globalization in
Historical Perspective.
h.
Frankel and Romer. 1999.
Does Trade Cause Growth? AER
89: 379-99. (but see institutions argument in Rodrik,
Subramian & Trebbi.
2002. Ms.)
i.
Williamson. 1998. Globalization, Labor Markets and
Policy Backlash in the Past. JEP
12.4: 51-72 (Symposium: Globalization in Perspective).
2.
The Size &
Composition of Governments & Countries (Week 13)
a.
Rodrik, Dani. 1998. Why Do More Open Countries have Bigger
Governments? JPE 106.5: 997-1032.
b.
Alesina & Wacziarg. 1998. Openness, Country Size and Government.
Journal of Public Economics 69: 305-21.
c.
Soskice. 1991. The Institutional Infrastructure for
International Competitiveness: A Comparative Analysis of the UK and
Germany. In Economics for the New
Europe. Atkinson and Brunetta, eds.
NYU Press.
d.
Alesina, Spolaore, and Wacziarg. 2000.
Economic Integration and Political Disintegration. AER 90: 1276-96.
Recommended:
e.
Alesina and Spolaore.
Forthcoming. The Size of
Nations. MIT
Press.
f.
Li and
Reuveny.
2003. Economic
Globalization and Democracy: An Empirical Analysis. Ms. Pennsylvania State University / Indiana
University.
3.
Economic Constraints and
Policy Convergence? (Week
14)
b.
Rodrik. 1997. Has Globalization Gone too Far? Ch.
3.
c.
Oatley. 1999. How Constraining is Capital
Mobility? The Partisan Hypothesis
in the Open Economy. AJPS 43.4: 1003-27.
d.
Boix. 1998. Political Parties, Growth and
Equality. Cambridge UP. Introduction & Ch.
1.
Recommended:
e.
Katzenstein. 1985. Small States in World Markets. Cornell
UP. Ch. 2.
f.
Frieden. 1991. Invested
Interests: the Politics of National Economic Policies in a World of Global
Finance. IO 45:
425-51.
g.
Hallerberg. 1996. Tax Competition in Wilhemine Germany and Its Implications for European
Union. World Politics 48:
324-
h.
Clark &
Reichert. 1998. International and Domestic Constraints
on Political Business Cycles in OECD Economies.
IO.