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  3. Political Economy of Institutions and Decisions

The Political Economy of Institutions and Decisions series focuses on two central questions: How do institutions evolve in response to individual incentives, strategies, and choices, and how do institutions affect the performance of political and economic systems? The series concentrates on answers to these questions based in methodological individualism. Its scope is comparative and historical rather than international or specifically American. Its focus is positive rather than normative, but many of the studies in the series offer analyses of informal institutional factors, such as social norms and culture, based on a rational-choice approach.

  • General Editors: Jeffry Frieden, Harvard University, Massachusetts, John Patty, University of Chicago, Elizabeth Maggie Penn, University of Chicago
  • Founding Editors: James E. Alt, Harvard University, Massachusetts, Douglass C. North, Washington University, St Louis

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81 results in Political Economy of Institutions and Decisions

Page 3 of 5

The Political Economy of Poland's Transition
  • New Firms and Reform Governments
  • John E. Jackson, Jacek Klich, Krystyna Poznanska
  • Published online:
    07 August 2009
    Print publication:
    06 June 2005
  • In the time span of a two-term US presidency, Poland went from an authoritarian one-party state with a faltering centrally planned economy to become a relatively stable multiparty democracy and a market economy with one of the highest GDP growth rates in Europe. A central feature of these economic and political reforms is a high rate of entry of new, domestically owned firms. This book uses detailed economic and political data to examine how these new firms contributed to the Polish transition. The authors test propositions about why some regions have more new firms than others and how the success of these new firms contributed to political constituencies that supported economically liberal parties. The book concludes by contrasting the Polish with the experiences of other transitional countries.

The Politics of Constitutional Review in Germany
  • Georg Vanberg
  • Published online:
    11 July 2009
    Print publication:
    06 December 2004
  • Constitutional courts have emerged as central institutions in many advanced democracies. This book investigates the sources and the limits of judicial authority, focusing on the central role of public support for judicial independence. The empirical sections of the book illustrate the theoretical argument in an in-depth study of the German Federal Constitutional Court, including statistical analysis of judicial decisions, case studies, and interviews with judges and legislators. The book's major finding is that the interests of governing majorities, prevailing public opinion, and the transparency of the political environment exert a powerful influence on judicial decisions. Judges are influenced not only by jurisprudential considerations and their policy preferences, but also by strategic concerns. By highlighting this dimension of constitutional review, the book challenges the contention that high court justices are largely unconstrained actors as well as the notion that constitutional courts lack democratic legitimacy.

Appointing Central Bankers
  • The Politics of Monetary Policy in the United States and the European Monetary Union
  • Kelly H. Chang
  • Published online:
    05 September 2009
    Print publication:
    18 August 2003
  • This book examines monetary policy by focusing on how the President and the Senate influence monetary policy by appointing Federal Reserve members. It attempts to answer three questions about the appointment process and its effects. First, do politicians influence monetary policy through Federal Reserve appointments? Second, who influences the process - the President alone or both the President and the Senate? Third, what explains the structure of the Federal Reserve appointment process? The test models show that the President alone, both the President and Senate, or neither, may influence monetary policy with Federal Reserve appointments. The structure of the process reflects political battles between the Democrats and Republicans regarding the centralization of authority to set monetary policy within the Federal Reserve System. The study extends the analysis to the European Central Bank and shows that the Federal Reserve process is more representative of society than the European Central Bank process.

The Politics of Property Rights
  • Political Instability, Credible Commitments, and Economic Growth in Mexico, 1876–1929
  • Stephen Haber, Armando Razo, Noel Maurer
  • Published online:
    02 December 2009
    Print publication:
    26 May 2003
  • This book addresses a puzzle in political economy: why is it that political instability does not necessarily translate into economic stagnation or collapse? In order to address this puzzle, it advances a theory about property rights systems in many less developed countries. In this theory, governments do not have to enforce property rights as a public good. Instead, they may enforce property rights selectively (as a private good), and share the resulting rents with the group of asset holders who are integrated into the government. Focusing on Mexico, this book explains how the property rights system was constructed during the Porfirio Díaz dictatorship (1876–1911) and then explores how this property rights system either survived, or was reconstructed. The result is an analytic economic history of Mexico under both stability and instability, and a generalizable framework about the interaction of political and economic institutions.

Public Debt and the Birth of the Democratic State
  • France and Great Britain 1688–1789
  • David Stasavage
  • Published online:
    05 November 2009
    Print publication:
    28 April 2003
  • This book develops new theory about the link between debt and democracy and applies it to a classic historical comparison: Great Britain in the eighteenth century which had strong representative institutions and sound public finance vs. ancient regime France, which had neither. The book argues that whether representative institutions improve commitment depends on the opportunities for government creditors to form new coalitions with other social groups, more likely to occur when a society is divided across multiple political cleavages. It then presents historical evidence to show that improved access to finance in Great Britain after 1688 had as much to do with the development of the Whig Party as with constitutional changes. In France, it is suggested that the balance of partisan forces made it unlikely that an early adoption of 'English-style' institutions would have improved credibility.

When Majorities Fail
  • The Russian Parliament, 1990–1993
  • Josephine T. Andrews
  • Published online:
    02 September 2009
    Print publication:
    21 October 2002
  • When Majorities Fail is a study of institutional failure in Russia's first democratic legislature. Inadequate rules and a chaotic party system combined to make it nearly impossible to pass a coherent legislative program, including a new constitution. The internal instability in Russia's parliament is known as cycling, one of the most important theoretical concepts in formal study of legislatures. There are few recorded cases of cycling in politically important settings. This book documents the presence of cyclical majorities in Russian Parliament with comprehensive case and statistical analysis, and demonstrates how the failure to adopt a new constitution led to the confrontation between parliament and president in the fall of 1993. Earlier research has shown that the design of a legislative institution is crucial in preventing cycling. The author shows how the institutional design of the parliament failed, underscoring the importance of institutional design in a democratic transition.

Elbridge Gerry's Salamander
  • The Electoral Consequences of the Reapportionment Revolution
  • Gary W. Cox, Jonathan N. Katz
  • Published online:
    10 November 2009
    Print publication:
    04 March 2002
  • The Supreme Court's reapportionment decisions, beginning with Baker v. Carr in 1962, had far more than jurisprudential consequences. They sparked a massive wave of extraordinary redistricting in the mid-1960s. Both state legislative and congressional districts were redrawn more comprehensively - by far - than at any previous time in America's history. Moreover, they changed what would happen at law should a state government fail to enact a new districting plan when one was legally required. This book provides a detailed analysis of how judicial partisanship affected redistricting outcomes in the 1960s, arguing that the reapportionment revolution led indirectly to three fundamental changes in the nature of congressional elections: the abrupt eradication of a 6% pro-Republican bias in the translation of congressional votes into seats outside the south; the abrupt increase in the apparent advantage of incumbents; and the abrupt alteration of the two parties' success in congressional recruitment and elections.

A Theory of the State
  • Economic Rights, Legal Rights, and the Scope of the State
  • Yoram Barzel
  • Published online:
    04 December 2009
    Print publication:
    03 December 2001
  • This book models the emergence of the state, and the forces that shape it. State creation is bound to protection needs. A specialized protector-ruler is efficient, but is also self-seeking. Individuals will install a ruler only after they create a mechanism to control him. Among the offshoots of the organized protection are legal system and decision-making procedures that include voting. The initial 'state of nature' may gradually evolve into a rule-of-law state. The state endows individuals with rights by delineating what it will protect. Enforcement, however, is never perfect. People use third parties such as firms to enforce agreements. As commodities become standardized, scale economies increase. In order to exploit the economies of within-state enforcement, the state will expand the contact enforcement territory by treaty or by conquest. The force may explain the creation of rule-of-law empires.

African Economies and the Politics of Permanent Crisis, 1979–1999
  • Nicolas Van de Walle
  • Published online:
    05 June 2012
    Print publication:
    24 September 2001
  • This 2001 book explains why African countries have remained mired in a disastrous economic crisis since the late 1970s. It shows that dynamics internal to African state structures largely explain this failure to overcome economic difficulties rather than external pressures on these same structures as is often argued. Far from being prevented from undertaking reforms by societal interest and pressure groups, clientelism within the state elite, ideological factors and low state capacity have resulted in some limited reform, but much prevarication and manipulation of the reform process, by governments which do not really believe that reform will be effective, which often oppose reforms because they would undercut the patronage and rent-seeking practices which undergird political authority, and which lack the administrative and technical capacity to implement much reform. Over time, state decay has increased.

Individuals, Institutions, and Markets
  • C. Mantzavinos
  • Published online:
    05 June 2012
    Print publication:
    08 January 2001
  • Individuals, Institutions, and Markets offers a theory of how the institutional framework of a society emerges and how markets within institutions work. The book shows that both social institutions, defined as the rules of the game, and exchange processes can be analyzed along a common theoretical structure. Mantzavinos' proposal is that a problem solving model of individual behavior inspired by the cognitive sciences provides such a unifying theoretical structure. Integrating the latest scholarship in economics, sociology, political science, law, and anthropology, Mantzavinos offers a genuine political economy showing how social institutions affect economic outcomes.

Timber Booms and Institutional Breakdown in Southeast Asia
  • Michael L. Ross
  • Published online:
    30 July 2009
    Print publication:
    08 January 2001
  • Scholars have long studied how institutions emerge and become stable. But why do institutions sometimes break down? In this book, Michael L. Ross explores the breakdown of the institutions that govern natural resource exports in developing states. He shows that these institutions often break down when states receive positive trade shocks - unanticipated windfalls. Drawing on the theory of rent-seeking, he suggests that these institutions succumb to a problem he calls 'rent-seizing' - the predatory behavior of politicians who seek to supply rent to others, and who purposefully dismantle institutions that restrain them. Using case studies of timber booms in Indonesia, Malaysia and the Philippines, he shows how windfalls tend to trigger rent-seizing activities that may have disastrous consequences for state institutions, and for the government of natural resources. More generally, he shows how institutions can collapse when they have become endogenous to any rent-seeking process.

Legislative Institutions and Ideology in Chile
  • John B. Londregan
  • Published online:
    22 October 2009
    Print publication:
    31 July 2000
  • The 1980s and 1990s have seen several authoritarian governments voluntarily cede power to constitutionally elected democratic governments. John Londregan uses Chile as a case study of this phenomenon, exploring what sorts of guarantees are required for those who are ceding power and how those guarantees later work out in practice. He constructs an analytical model of a democratic transition and provides a new statistical technique for analysing legislative votes, based upon a detailed empirical analysis of Chile's legislative politics. Legislative Institutions and Ideology in Chile extends existing spatial models of policy preferences by incorporating a valence component to policy choices. The valence component enables an agenda setter, in Chile the democratically elected president, to overcome veto players' objections to reform. Londregan specifically also uses Senate committee voting records to study the impact of human rights concessions on the political debate.

Industrializing English Law
  • Entrepreneurship and Business Organization, 1720–1844
  • Ron Harris
  • Published online:
    12 August 2009
    Print publication:
    19 June 2000
  • Between the passage of the Bubble Act in 1720 and the sweeping reforms of the General Incorporation Act of 1844, the legal framework of business organization in England remained remarkably stagnant despite the profound economic and structural changes wrought by the Industrial Revolution. Originally published in 2000, this book analyzes why this discrepancy occurred, especially when other nations of that time, whose economies were far less developed, were evolving more permissive laws of business organization. Employing extensive primary source archival material, Ron Harris shows how the institutional development of major forms of business organization - the business corporation, the partnership, the trust, the unincorporated joint-stock company - evolved and how English law finally took account of these developments.

Veto Bargaining
  • Presidents and the Politics of Negative Power
  • Charles M. Cameron
  • Published online:
    20 January 2010
    Print publication:
    19 June 2000
  • The late-twentieth century has given rise to the most concentrated period of divided party government in American history. With one party controlling the presidency and the opposing party controlling Congress, the veto has inevitably become a critical tool of presidential power. Combining sophisticated game theory with unprecedented data, this book analyzes how divided party presidents use threats and vetoes to wrest policy concessions from a hostile Congress. Case studies of the most important vetoes in recent history add texture to the analysis, detailing how President Clinton altered the course of Newt Gingrich's Republican Revolution. Offering the first book-length analysis to bring rational choice theory to bear on the presidency, Veto Bargaining offers a major contribution to our understanding of American politics in an age of divided party government.

Delegating Powers
  • A Transaction Cost Politics Approach to Policy Making under Separate Powers
  • David Epstein, Sharyn O'Halloran
  • Published online:
    02 December 2009
    Print publication:
    13 November 1999
  • David Epstein and Sharyn O'Halloran produce the first unified theory of policy making between the legislative and executive branches. Examining major US policy initiatives from 1947 to 1992, the authors describe the conditions under which the legislature narrowly constrains executive discretion, and when it delegates authority to the bureaucracy. In doing so, the authors synthesize diverse and competitive literatures, from transaction cost and principal-agent theory in economics, to information models developed in both economics and political science, to substantive and theoretical work on legislative organization and on bureaucratic discretion. Professors Epstein and O'Halloran produce their own deductive specification of the conditions for making or delegating policy, gather a rich, original data set on delegation and discretion in the postwar era to test the propositions derived from their model, and devise appropriate statistical tests to assess the validity of their propositions. With implications for the study of constitutional design, political delegation, legislative organization, administrative law, and the role of the executive in policy making, this book redefines the study of legislative-executive relations under separate powers.

Politicians and Poachers
  • The Political Economy of Wildlife Policy in Africa
  • Clark C. Gibson
  • Published online:
    02 December 2009
    Print publication:
    13 June 1999
  • Although wildlife fascinates citizens of industrialized countries, little is known about the politics of wildlife policy in Africa. In this innovative book, Clark Gibson challenges the rhetoric of television documentaries and conservation organizations to explore the politics behind the creation and change of wildlife policy in Africa. This book examines what Clark views as a central puzzle in the debate: Why do African governments create policies that apparently fail to protect wildlife? Moving beyond explanations of bureaucratic inefficiency and corrupt dictatorships, Gibson argues that biologically disastrous policies are retained because they meet the distributive goals of politicians and bureaucrats. Using evidence from Zambia, Kenya, and Zimbabwe, Gibson shows how institutions encourage politicians and bureaucrats to construct wildlife policies that further their own interests. Different configurations of electoral laws, legislatures, party structures, interest groups, and traditional authorities in each country shape the choices of policymakers - many of which are not consonant with conservation. This book will appeal to students of institutions, comparative politics, natural resource policymaking, African politics, and wildlife conservationists.

Southern Paternalism and the American Welfare State
  • Economics, Politics, and Institutions in the South, 1865–1965
  • Lee J. Alston, Joseph P. Ferrie
  • Published online:
    05 May 2010
    Print publication:
    13 January 1999
  • Using institutional economics, Professors Alston and Ferrie show how paternalism in Southern agriculture helped shape the growth of the American welfare state in the hundred years following the Civil War. It was an integral part of agricultural contracts prior to mechanization. Paternalism involved the exchange of 'good and faithful' labour services for a variety of in-kind services, most notably protection from physical violence. The Southern landed elite valued paternalism because it reduced monitoring costs and turnover. Workers valued paternalism because of the lack of civil rights. In order to maintain the value of paternalism to their workers, the agricultural interests needed to prevent meddling from the federal government, which they accomplished through their disproportionate political power. Only the advent of mechanization and complementary technology in the late 1950s and early 1960s finally reduced the desire of Southern agricultural interests to fight the expansion of federal welfare programmes.

Consent, Dissent, and Patriotism
  • Margaret Levi
  • Published online:
    10 December 2009
    Print publication:
    13 October 1997
  • Democratic governments are able to elicit, legally and legitimately, both money and men from their populations. Certainly there is tax evasion, draft evasion, and even outright resistance; yet to a remarkable extent citizens acquiesce and even actively consent to the demands of governments, well beyond the point explicable by coercion. This is a puzzle for social scientists, particularly those who believe that individuals are self-interested, rational actors who calculate only the private egoistic costs and benefits of possible choices. The provisions of collective good should never justify a quasi-voluntary tax payment and the benefits of a war could not possibly exceed the cost of dying. This book explains the institutionalization of policy in response to anticipated and actual citizen behaviour and the conditions under which citizens give, refuse and withdraw their consent. Professor Levi claims that citizens' consent is contingent upon the perceived fairness of both the government and of other citizens. Most citizens of democracies, most of the time, are more likely to give their consent if they believe that government actors and other citizens are behaving fairly toward them.

Bicameralism
  • George Tsebelis, Jeannette Money
  • Published online:
    02 December 2009
    Print publication:
    13 June 1997
  • This book examines some fifty countries to ascertain how the chambers of bicameral legislatures interact when they produce legislation. An understanding of this interaction is essential because otherwise legislative behaviour in each chamber may be unintelligible or incorrectly interpreted. The book employs cooperative game theoretic models to establish that bicameral legislatures, when compared with unicameral legislatures, increase the stability of the status quo and reduce intercameral differences to one privileged dimension of conflict. Non-cooperative game theoretic models are used to investigate the significance of a series of insitutional devices used to resolve intercameral conflict where a bill is introduced, which chamber has the final word, how many times a bill can shuttle between chambers, and whether conference committees are called. Empirical evidence, mainly from the French Republic, is used to evaluate the arguments.

Economic Analysis of Property Rights
  • 2nd edition
  • Yoram Barzel
  • Published online:
    05 June 2012
    Print publication:
    13 April 1997
  • This is a study of the way individuals organise the use of resources in order to maximise the value of their economic rights over these resources. Property rights and all forms of organisation result from people's deliberate actions. In the tradition of Coase, this study offers a unified theoretical structure to deal with exchange, rights formation and organisation which traditional economic theory assumes away. A person's economic property rights over an asset are defined here as the person's ability to gain from the asset by direct consumption or by exchange. It is prohibitively costly to measure accurately all assets' attributes; therefore, rights to them are never fully delineated. Property is consequently in danger of appropriation by others. Individuals enhance their rights by such actions as the protection and better delineation of their assets. In this new edition, Professor Barzel introduces the central role of equity capital as a guarantor of the activities of the firm and elaborates on the distinction between economic rights and legal rights.

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