Economie politică pozitivă

Primary tabs

Economics, economic policy and public choice

Aims and scope: 

This course introduces political economy to students completely new to the subject. The conversational yet precise style of this course is an excellent way of presenting the science of economics, economic policy and public choice to tomorrow's decision makers. The course is designed to provide students with a sound conceptual understanding of the subject using contemporary examples where possible. It stands out amongst all other introductory economics courses by stressing the fact that economic processes do not take place in isolation from social and political processes and by encouraging students to apply an economic way of thinking in their analysis of political processes. The course covers the most important topics in political economy while reflecting European economic structures and institutions and adapting the language and cultural references to a European audience. For instance, the euro is the basic currency referred to throughout the course, and case studies and examples largely refer to the European economy and EU policies. These features are apparent when dealing with the EU's common agricultural policy, external trade policy, competition policy, VAT, the euro and ECB monetary policy. By the end of the course, students should be able to understand the effects on markets of government policies such as a the establishment of a minimum price, a price ceiling, a quota, or a subsidy; the effects of taxation and the design of optimal tax systems, market failure (monopoly, externatilies, public goods) and ways to deal with it, macroeconomic data, economic growth, monetary policy, and fiscal policy. They should also be acquainted with the political conflicts related to economic policy and economic explanations of policy making.

Topics: 

1. Ten principles of economics. Thinking like an economist. Introduction to the scientific method. Economics, economic policy and public choice. 2. Supply, demand, and public policies. Price controls. Subsidies. Why is food more expensive in the EU than in the US? 3. Market efficiency and the cost of taxation. Optimal tax systems. Sufficiency, efficiency and equity. A reduced VAT rate for food? 4. The efficiency of free trade and the cost of protection. Tariffs. Quotas. Non-tariff barriers. Winners and losers from trade. Arguments for protection. EU trade policy. 5. Preferential trade agreements. Trade creation. Trade diversion. Would Romania benefit more from Moldova's EU integration than Moldova itself? 6. Externalities. Pigouvian taxes. Quotas. Tradeable pollution permits. Public goods. Private goods. Rivalry. Excludability. Club goods. 7. Monopoly. The costs of monopoly. Economies of scale and natural monopolies. EU competition policy. 8. Measuring the macroeconomy. Production, growth, employment, inflation, income distribution. 9. Money and monetary policy. Inflation. The inflation tax. Who creates money in the EU? 10. Fiscal policy. Multiplier effect. Crowding out. Ricardian equivalence. How much is the government spending multiplier? 11. Economic growth. The Harrod-Domar model. The neoclassical growth model. Conditional convergence. 12. Introduction to public choice I. Democracy. Spatial models of voting. The median-voter theorem. Electoral and lobbying campaigns. 13. Introduction to public choice II. Bureaucracy. Agenda setting. The principal-agent problem. 14. Introduction to public choice III. The Exit-Voice-Loyalty (EVL) game. Structural dependence of the state on capital. Selectorate theory. Why is bad behaviour almost always good politics?

Indicative reading: 

Mankiw, N. G. (2020). Essentials of economics, 9th ed. Cengage learning; or Mankiw, N. G. (2020). Principles of economics, 9th ed. Cengage learning. Previous editions of the book are OK.

Classes: