Political Economy

Political economy studies the two-way interaction between polity and economy. It studies how different political systems affect economic performance (especially the welfare of citizens) and how the economy constrains and ultimately defines the political system. Traditionally, political economy has dealt with problems such as electoral competition, the economic analysis of law, lobbying, electoral rules, social insurance, environmental policy, institutions and accountability, the control of bureaucracy, regulation, taxation, public debt, international policy coordination, and the role of both monetary and fiscal policy on growth and economic cycles. The tools used range from principal-agency, game theory and general equilibrium, both static and dynamic. More recent topics include the breakup of nations, the origins and development of political institutions, political reform in transition economies, and the role of culture, ethnicity, and gender in explaining economic outcomes.

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