Political Science 425 Donovan Winter 1994 Office AH 424; Hours F: 10-12; Tu 10-12 Politics of Economic Policy Catalogue Description: Prereq: Pol Sci 250 or equivalent, and Econ 206 or 207 or equivalent. The political consequences of taxing, spending, interest rates, and the federal reserve system and government regulation of business. Course Purpose: This classs will consist of a basic introduction to theoretical and applied political economy, with particular emphasis on the US. There are three major themes: First, a considerable portion of the course material will focus on the political tools of economic policymaking in the US. Our primary concern here is to better understand the connection between politics and the workings of economic systems. We are interested in how governments shape economic outcomes (directly and indirectly), and how economic outcomes shape governments. To examine how governments affect outcomes, we focus on topics such as tax codes, regulation, market incentives, and federal reserve policy. To examine how economics affects governments, we focus on topics such as voter responsiveness to economic conditions and the potential for a political-business cycle. Second, we will explore the application economic theory (externalities, common property resources, rationality, privatization, public goods, collective action) to explanations of politics. Third, we are interested in narrower questions of how governments affect economic performance and productivity and how governments structure the international economy. This will be investigated in a comparative perspective, with reference to examples from several advanced industrial political economies. Reading Material: Texts: You are encouraged to purchase the following book: Graham, K. Wilson (1990). Business and Politics: A Comparative Introduction. Chatham House, 2nd edition. You will need the following over-priced book, and are encouraged to it acquire somehow: Lieberman, Carl (1991) Making Economic Policy. Prentice Hall The following text is recommended: Lewis-Beck, Micheal (1990) Economics and Elections: The Major Western Democracies. Univ. of Michigan Press. There will also be a series of articles that will be required reading. These will be placed in the library reserve room. Grading: Grades will be based on a scale similar to the one represented below. Midterm Exam : 25% Research Paper: 25% Final Exam: 35% Class Participation 10% - 15%* *participation will include scores on short quizzes if needed. a separate description of the paper will be given in the second week of class. Course content: (dates are estimates and are subject to change) I) Introduction: The Nature of Political Economy (1/5) II) Three Models of Political Economy: (1/10) READ: Fallows: Atlantic, Dec 1993 A) Liberal Passell, et. al. , NYT Dec. 15, 1993 B) Nationalist C) Marxists III) The US in the World Economy: (1/12) READ: Bosworth & Lawrence; Keohane A) The Rise and Decline (and Rise?) of the US as a System Leader Wallerstein B) Trade Policy, Trade as a Weapon Knutter; Harpers, Sept. 1993 no class meeting (1/17) Dr. Martin Luther King's Day IV) International Crisis and Domestic Political Response: (1/19 ) READ: Gourevitch V) Financial Systems and Industrial Change (1/19 READ: TBA VI) Business and Politics in Comparative Perspective (1/24 - 1/26) READ Wilson; A) USA & Great Britain Chapter 1 - 3 B) Germany Chapter 4 C) Neo-Corporatism Chapter 6 D) Japan Chapter 8 Fallows: Atlantic Jan., 1994 VII) The Tools of Economic Policymaking in the USA (1/31 - 2/2) READ: Lieberman; A) Fiscal Policy: Taxation and Spending Chapters 1 - 4 B) Monetary Policy Chapter 5 & MD Reagan C) Regulation Chapter 6 D) Subsidies & Industrial Policy Chapters 7 & 8 TBA E) Budget Deficits in the US Mann & Schultze MIDTERM EXAM (2/7) ***date subject to change*** VIII) The Growth of Government and Economic Performance (2/9 - 2/14) READ: Peacock and Wiseman A) Governments and Productivity Cameron B) Interest Group Government C)Privatization TBA D) TBA IX) Economics and Elections (2/16- 2/23) READ: Lewis-Beck; no class meeting (2/21): President's Day Chapters 1 - 3 Chapters 8 - 9 A) Economic Voting Morris; Atlantic July 1993 B) Political Business Cycles Tufte C) Who gets what from government TBA X) Market Failure and Government Intervention (2/28) READ A) Environmental Regulation Dorfman and Dorfman XI) Further Theoretical Perspectives on Political Economy (3/2) READ TBA XII) State and Local Economic Development Efforts in the US (3/7) XIII) Review (3/9) (this meeting may be cancelled or rescheduled) Final Exam: Wed. 3/16, 3:30-5:30pm.