Georg-August-Universität Göttingen Winter Semester 2011/12

Dr. R. Emre Aytimur – Dr. Aristotelis Boukouras

Master Seminar on Political Economy:

Suggested Topics
Please write an essay on your assigned topic. The essay should answer the questions of the
topic by critically reviewing and analyzing several academic papers. The provided references
are a starting point in your search, and these references will help you to find other relevant
academic papers.

1) Lobbying

What is meant by the term lobbying and why does it happen? What are the effects of
lobbying on economic policies and social welfare?

References:
a) Besley, T. and S. Coate (2001): "'Lobbying and Welfare in a Representative Democracy",
Review of Economic Studies, Vol. 68, pp. 67-82.
b) Bhagwati, J. (1980): ''Lobbying and Welfare'', Journal of Public Economics, Vol. 14, pp.
355-363.
c) Grossman G. And E. Helpman (1996): "Electoral Competition and Special Interests
Politics", Review of Economic Studies, Vol. 63, pp. 265-286.

2) Fiscal Deficits and Government Debt

Overaccumulation of government debt can have disastrous consequences for an economy in

the long-run. How can one explain these phenomena and how, if at all, can they be
prevented?

References:
a) Alesina, A. and G. Tabellini (1990): "A Positive Theory of Fiscal Deficits and
Government Debt", Review of Economic Studies, Vol. 57, pp. 403-414.
b) Velasco, A. (1997): ''A Model of Endogenous Fiscal Deficits and Delayed Fiscal
Reforms'', NBER, Working Paper 6336.

3) Media and Politics

Through what channels do mass media affect public policies? And how do politicians affect
the competition among mass media?

References:
a) Stromberg, D. (2004): "Mass Media Competition, Political Competition and Public
Policy", Review of Economic Studies, Vol. 71, pp. 265-284.
b) Besley, T. and A. Prat (2006): “Handcuffs for the Grabbing Hand? Media Capture and
Government Accountability”, American Economic Review, Vol. 96, pp. 720-7

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4) Autocracies and Dictatorships

Autocratic and dictatorial regimes are often considered the bane of the developing world.
What economic conditions generate these regimes and how do their rulers manage to
maintain their power?

References:
a) Acemoglu, D., Ticchi D. And A. Vindigni (2008): "A Theory of Military Dictatorships",
NBER Working Paper No. 13915.
b) Miquel, P. (2007): "The Control of Politicians in Divided Societies: The Politics of Fear",
The Review of Economic Studies, Vol. 74, pp. 1259-1274.

5) Political Competition

Is political competition as efficient as market competition? What are the similarities and
differences between the two?

References:
a) Stigler, J. (1972): "Economic Competition and Political Competition", Public Choice, Vol.
13, pp. 91-106.
b) Wittman, D. (1989): "Why Democracies Produce Efficient Results", Journal of Political
Economy, Vol. 97, pp. 1395-1424.

6) Political Business Cycles

Many economists claim that a reason for economic fluctuations is the election motive of
politicians. What is the theory behind this claim? Does the empirical evidence support it?

References:
a) Alesina, A. and N. Roubini (1992): "Political Cycles in OECD Economies", Review of
Economic Studies, Vol. 59, pp. 663-688.
b) Drazen, A. (2000): "The Political Business Cycle after 25 Years", NBER Macroeconomics
Annual, Vol. 15, pp. 75-117.
c) Nordhaus, D. (1975): "The Political Business Cycle", Review of Economic Studies, Vol.
42, pp. 169-190.

7) Income Redistribution

Income redistribution policies are common in many countries. What justifications can one
provide for such policies? How does political competition affect redistributive policies and
what is their impact on economic outcomes?

References:
a) Lindbeck, A. and J. Weibull (1987): "Balanced-Budget Redistribution as the Outcome of
Political Competition", Public Choice, Vol. 52, pp. 273-297.
b) Alesina, A. and A. Drazen (1991): "Why Are Stabilizations Delayed?”, American
Economic Review, Vol. 81, pp. 1170-118

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8) Polarization

What are the effects of polarization on political competition and the resulting policies? What
social conditions facilitate the persistence of polarization?

References:
a) Alesina, A., Baqir, R. and W. Easterly (1999): "Public Goods and Ethnic Divisions", The
Quarterly Journal of Economics, Vol. 114, pp. 1243-1284.
b) Svensson, J. (2005): "Controlling Spending: Electoral Competition, Polarization and
Endogenous Platforms", Working Paper.

9) Vote-Buying

Vote-buying is an illegal act in all democracies. Why is this the case? Could one provide an
argument to support the opposite?

References:
a) Dekel, E., Jackson, M. and A. Wolinsky (2008): "Vote Buying: General Elections",
Journal of Political Economy, Vol. 116, pp. 351-380.
b) Kochin, M. and L. Kochin (1998): "When is Buying Votes Wrong?", Public Choice, Vol.
97, pp. 645-662.
c) Nichter, S. (2008): "Vote Buying or Turnout Buying? Machine Politics and the Secret
Ballot", American Political Science Review, Vol. 102, pp. 19-31.

10) Separation of Powers and Constitutions

Separation of powers and constitutions are two key elements of both parliamentary and
presidential democracies. What is the role of these institutions in terms of social organization
and how do they affect, if at all economic performance?

References:
a) Persson T. and G. Tabellini (2004): "Constitutions and Economic Policy", Journal of
Economic Perspectives, Vol. 18, pp. 75-98.
b) Persson T., Roland G. and G. Tabellini (1997): "Separation of Powers and Political
Accountability", The Quarterly Journal of Economics, Vol. 112, pp. 1163-1202.

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11) Political Economy of Reforms

Even an efficiency-enhancing reform can be difficult to implement since the potential losers
will oppose the reform. What are the difficulties involved? How and when can a government
overcome these political constraints to implement the reform?

References:
a) Dewatripont, M. and G. Roland (1992): "The Virtues of Gradualism and Legitimacy in the
Transition to a Market Economy", Economic Journal, Vol. 102, pp. 291-300.
b) Fernandez, R. and D. Rodrik (1991): " Resistance to Reform: Status Quo Bias in the
Presence of Individual- Specific Uncertainty ", American Economic Review, Vol. 81, pp.
1146-1155.

12) Comparative Politics

How do electoral rules and political regimes shape economic policies? What are the
differences between majoritarian and proportional systems and between parliamentary and
presidential regimes in terms of their effects on public good provision and redistributive
policies?

References:
a) Lizzeri, A. and N. Persico (2001): “The Provision of Public Goods Under Alternative
Electoral Incentives”, American Economic Review, Vol. 91, pp. 225-39.
b) Persson, T., Roland, G. and Tabellini G. (2000): "Comparative Politics and Public
Finance", Journal of Political Economy, Vol. 108, pp. 1121-1161.

13) Fiscal Federalism

How does the political process in a federal state shape the economic policies? The focus
should be more on the positive, and not normative, analysis of the implications of a federal
political system and of the interactions between federal and state governments.

References:
a) Dixit, A. and J. Londregan (1998): “Fiscal Federalism and Redistributive Politics”, Journal
of Public Economics, Vol. 68, pp. 153-180.
b) Crémer, J. and T. R. Palfrey (2000): “Federal Mandates by Popular Demand”, Journal of
Political Economy, Vol. 108, pp. 905-927.

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14) Bureaucracy and Corruption

Which explanations can be given for the corrupt behavior of bureaucrats? In which
conditions may this behavior be exacerbated? What are the possible solutions to this
problem?

References:
a) Acemoglu, D. and T. Verdier (2000): “The Choice between Market Failures and
Corruption”, American Economic Review, Vol. 90, pp. 194-211.
b) Banerjee, A. V. (1997): “A Theory of Misgovernance”, Quarterly Journal of Economics,
Vol. 112, pp. 1289-1332.

15) Termination of Parliamentary Governments

Which factors explain government terminations in parliamentary systems?

References:
a) Lupia, A. and K. Strom (1995): “Coalition Termination and the Strategic Timing of
Parliamentary Elections”, American Political Science Review, Vol. 89, pp. 648-665.
b) Baron, D. P. (1998): “Comparative Dynamics of Parliamentary Governments”, American
Political Science Review, Vol. 92, pp. 593-609.

16) Nations

What are the economic and political factors which influence the number and the size of
nations? In other words, what are the possible economic and political explanations of the size
of countries?

References:
a) Alesina, A. and E. Spolaore (1997): “On the Number and Size of Nations”, Quarterly
Journal of Economics, Vol. 112, pp. 1027-1056.
b) Bolton, P. and G. Roland (1997): “The Breakup of Nations: A Political Economy
Analysis”, Quarterly Journal of Economics, Vol. 112, pp. 1057-1090.

17) Democratization

Which economic factors explain a political transition from a nondemocratic society to a

democratic society? Which economic factors explain the threat of going back to a
nondemocratic society? When does a democracy get stable?

References:
a) Acemoglu, D. and J. A. Robinson (2001): “A Theory of Political Transitions”, American
Economic Review, Vol. 91, pp. 938-963.
b) Lizzeri, A. and N. Persico (2004): “Why Did the Elites Extend the Suffrage? Democracy
and the Scope Of Government, with an Application to Britain's “Age Of Reform””, Quarterly
Journal of Economics, Vol. 119, pp. 707-765

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18) Inefficiencies of Political Systems

The political institutions may result in inefficient (not Pareto optimal) policy choices. This
cannot be explained only by saying that the reason is the politically powerful group
exploiting the others, because in principle this group could choose the efficient outcome and
then get the biggest share. So, what are the explanations to the choices of inefficient policies?

References:
a) Acemoglu, D. (2002): “Why not a Political Coase Theorem? Social Conflict, Commitment
and Politics”, NBER Working Paper 9377.
b) Besley, T. and S. Coate (1998): “Sources of Inefficiency in a Representative Democracy:
A Dynamic Analysis”, American Economic Review, Vol. 88, pp. 139-156.

19) Political Campaign Advertising

How does political campaign advertising shape political competition? What are the good and
bad points about campaign advertising? Is a law restricting campaign contributions
beneficial?

References:
a) Coate, S. (2004): “Political Competition with Campaign Contributions and Informative
Advertising”, Journal of the European Economic Association, Vol. 2, pp. 772-804.
b) Prat, A. (2002): "Campaign Advertising and Voter Welfare." Review of Economic Studies,
Vol. 69, pp. 999-1018.