Professor Torben Iversen Office Hours: By appointment

Institute for Quantitative E-mail: Iversen@fas.harvard.edu

Social Science http://www.fas.harvard.edu/~iversen
CGIS N-305

Government 90au
Fall 2007
Tuesday 2-4
(CGIS N-108)

Political Economy
This course is a survey of topics and theories in comparative political economy
(=the interplay of politics and economics in different countries) with a focus on
advanced democracies (North America, Western Europe, and East Asia). Why do
some governments and institutions generate better economic performance than
others? Why are some economies more egalitarian than others? Why do some
governments redistribute more than others?

We will concentrate on theories that seek to explain the main differences in

economic policy and performance across nations, while trying to establish the
relative importance of domestic institutions, political cleavages, partisanship, and
"external" forces of change such as globalization. Against the backdrop of the fall
of communism, one of the overriding themes of the seminar is whether there are
distinct and enduring "varieties of capitalism”, or whether modern political
economies converge to a common efficient form (the American perhaps?). If there
are distinct varieties, can societies choose between them? And if so: how?

Although this is a Government course, we make use of insights from economics.

For this reason it is an advantage, but not a requirement, to have taken an
introductory course in economics (micro, macro or both). Yet the most important
requisites are an open mind and a desire to understand the diversity of ways in
which democratic societies have chosen to organize their economies, and how these
choices impact the welfare of their citizens.

To facilitate in the preparation for each week's class, I will post reading notes online
that highlight some of the central themes and issues for a class and occasionally
provide some background theory or history. The notes can (only) be accessed from
the course web site athttp://www.courses.fas.harvard.edu/colgsas/8213
Requirements:

Two critical essays of 6-7 pages each, one take-home final exam, and active
participation. The essays must highlight a problem, theory, or theme in the readings
for one week (but with references to previous weeks where appropriate), and each
essay should cover a different part of the course. Papers are due at noon the day
before class (i.e., on Monday). The take-home final (9-10 pages) will cover the
materials for the entire class. See online syllabus for further instructions on writing
papers. Since this course is a seminar, it is essential that students come prepared for
class and participate actively.

Grading:

Papers: 20% each

Final: 35%
Participation: 25%

Readings:
- Books available for purchase at the Coop:

Mancur Olson. The Rise and Decline of Nations. Yale University Press (1982)

Dani Rodrik, Has Globalization Gone Too Far? Institute for International
Economics (1997)

Jonas Pontusson, Inequality and Prosperity: Social Europe Vs. Liberal America.
Cornell University Press, 2005.

Alberto Alesina and Edward Glaeser, Fighting Poverty in the US and Europe.
Oxford University Press, 2003.

- All other readings are available online by using the links on the electronic
syllabus.

Topics and Readings

Week 1 (9/18): Introduction and preview

PART I: INSTITUTIONAL FOUNDATIONS OF PROSPERITY

Week 2 (9/25). Markets and "Embedded Liberalism"

John G. Ruggie, "International Regimes, Transactions and Change. Embedded
Liberalism in the Post-War Economic Order."International Organization (1982),

Barry Eichengreen, "Institutions and Economic Growth: Europe after World War
II.. In Nicholas Crafts and Gianni Toniolo, eds.,Economic Growth in Europe since
1945. Cambridge: Cambridge University Press, 1997.

Douglas North, Institutions, Institutional Change and Economic Performance

(Cambridge University Press, 1990), chapters 12-14. [Course pack]

Jonas Pontusson, Inequality and Prosperity, ch.1 .

Week 3 (10/2). Varieties of capitalism and economic performance

Mancur Olson, The Rise and Decline of Nations. New Haven: Yale U. Press (1982),
chs. 2-3.

Peter Lange and Geoffrey Garrett, "The Politics of Growth: Strategic Interaction
and Economic Performance, 1974-1980." Journal of Politics 47 (1985), 792-27.

Jonas Pontusson, Inequality and Prosperity, ch.2.

Peter A. Hall and David Soskice, eds., Varieties of Capitalism: The Institutional
Foundations of Comparative Advantage (2001): Introduction.

Week 4 (10/9). Central banks and macroeconomic policy

Douglas Hibbs, "Political Parties and Macroeconomic Policy," American Political

Science Review, 71 (4) (1977). [Read only pp. 1467-75]

Vittorio Grilli, Donato Masciandoro and Guido Tabellini. "Political and Monetary
Institutions and Public Financial Policies in the Industrialized Countries," Economic
Policy 13 (1991).

Alberto Alesina and Larry Summers, “Central Bank Independence and

Macroeconomic Performance – Some Comparative Evidence.”Journal of Money,
Credit, and Banking (1993), 151-62.

Jonas Pontusson, Inequality and Prosperity, ch.5.

David Soskice, “Macroeconomics and Varieties of Capitalism.” In Martin Rhodes,

Bob HanckÉand Mark Thatcher (eds.), Beyond Varieties of Capitalism, Oxford:
Oxford University Press 2006.

PART II: DIVIDING THE PIE: POWER, DEMOCRACY, AND

THE FAMILY
Week 5 (10/16): Perspectives on the welfare state

Alberto Alesina and Edward Glaeser, Fighting Poverty in Europe and the U.S. New
York: Oxford University Press, ch. 1

Jonas Pontusson, Inequality and Prosperity, ch.7.

Allan H. Meltzer and Scott. F. Richard, "A Rational Theory of the Size of
Government” Journal of Political Economy 89 (1981), 914-17 (Read only first 3
pages).

Gosta Esping-Andersen, Three Worlds of Welfare Capitalism, chs. 1-3.

Estevez-Abe, Margarita, Torben Iversen and David Soskice. 2001. "Social

Protection and the Formation of Skills: A Reinterpretation of the Welfare State," in
Peter A. Hall and David Soskice, eds., Varieties of Capitalism: The Institutional
Foundations of Comparative Advantage.Oxford: Oxford University Press.

Week 6 (10/23): Democratic institutions and redistribution

Alesina and Glaeser, Fighting Poverty, ch. 4.

Torsten Persson and Guido Tabellini, The Economic Effects of Constitutions. MIT
Press, 2003, [Read only Chapter 2, plus pp. 129-34 and 140-44]

Arend Lijphart, "Unequal Participation: Democracy’s Unresolved Dilemma,"

American Political Science Review, 91 (1997), pp. 1-14.

Boix, Carles, “Setting the Rules of the Game: The Choice of Electoral Systems in
Advanced Democracies.” American Political Science Review 93 (1999), 609-24.

Torben Iversen and David Soskice, “Distribution and Redistribution: The Shadow
from the Nineteenth Century“ [if you are interested in more detail on the argument
about PR and redistribution, click here. If you interested in seeing more about the
historical argument, click here]

Week 7 (10/30): The politics of work and leisure

Jonas Pontusson, Inequality and Prosperity, ch.4.

Torben Iversen and Anne Wren, “Equality, Employment, and Budgetary Restraint:
The Trilemma of the Service Economy.” World Politics, 50 (1998), 507-46.

David Rueda, “Insider-Outsider Politics in Industrialized Democracies: The

Challenge to Social Democratic Parties.” American Political Science Review 99,
2005, 61-74.

Alberto Alesina, Edward Glaeser, and Bruce Sacerdote, “Work and Leisure in the
U.S. and Europe: Why so Different? Harvard Institute of Economic Research
Discussion Paper No. 2068
(2005).

Olivier Blanchard, “The Economic Future of Europe.” Journal of Economic

Perspectives 18 (Fall 2004), 3-26.

Week 8 (11/6): Gender, Family, and Inequality

Gary Becker. Treatise on the Family (Harvard University Press 1993), ch. 2.
[Course pack]

Sven Lundberg and R. A. Pollak, “Bargaining and Distribution in Marriage”.

Journal of Economic Perspectives 10 (4) (1996), 139-58

GÖsta Esping-Andersen, Social Foundations of Postindustrial Economies. Oxford

University Press . READ ONLY pp. 60-67 (plus the definition of de-
familialization on p. 51).

John R. Lott and Lawrence W. Kenny, "Did women's suffrage change the size and
scope of government?" Journal of Political Economy 107 (6), 1163-1198 (1999).

Torben Iversen and Frances Rosenbluth, “The Political Economy of Gender:

Explaining Cross-National Variation in the Gender Division of Labor and the
Gender Voting Gap.”American Journal of Political Science 50 (2006), 1-26.

PART III: THE POLITICS OF CHANGE

Week 9 (11/13): The impact of globalization and

postindustrialization

James Alt, Jeffry Frieden, Michael J. Gilligan, Dani Rodrik and Ronald Rogowski,
"The Political Economy of International Trade - Enduring Puzzles and an Agenda
for Inquiry, " Comparative Political Studies 29 (6), 1996.

Dani Rodrik, Has Globalization Gone Too Far? (Washington DC: Institute for
International Economics, 1997), chs. 3-4.

Simmons Beth A. And Zachary Elkins, “The Globalization of Liberalization: Policy

Diffusion in the International Political Economy.” American Political Science
Review 98 (1), 2004: 171-189.

Torben Iversen and Thomas Cusack "The Causes of Welfare State Expansion:
Deindustrialization or Globalization?" World Politics, April 2000.

*** NO CLASS ON 11/20 – WEEK OF THANKSGIVING RECESS ***

Week 10 (11/27): New cleavages: Race, postmarialism, and risk

Alesina and Glaeser, Fighting Poverty, ch. 6. (on ethnic diversity)

Ronald Inglehart, "Value Change in Industrial Societies." American Political

Science Review 81, 1987, 1289-1295. [Read only first 7 pages: 1289-95]

Ronald Inglehart and Paul R. Abramson, "Economic Security and Value Change."
American Political Science Review 88 (1994), 336-54 .

Torben Iversen, “Class Politics is Dead. Long Live Class Politics.” Comparative
Politics Newsletter, 2006.

Thomas Cusack, Torben Iversen, and Philipp Rehm, “Risk at Work: The Demand
and Supply Sides of Government Redistribution” Prepared for the Oxford Review of
Economic Policy.

Week 11 (12/4): The politics of institutional reform

Peter A. Hall. "Policy Paradigms, Social Learning and the State.” Comparative
Politics 25 (1993), 275-96.

Paul Pierson, “The New Politics of the Welfare State.” World Politics (1996), 143-
79.

Jonas Pontusson, Inequality and Prosperity, ch. 8.

Martin Rhodes, “The Political Economy of Social Pacts: ‘Competitive Corporatism

and European Welfare Reform” in Paul Pierson, ed., The New Politics of the
Welfare State. New York: Oxford University Press: 165-94.

Week 12 (12/11): Economic inequality and political polarization

Alesina and Glaeser, Fighting Poverty, ch. 7.

Nolan McCarty, Keith Poole, and Howard Rosenthal, Polarized America. Ch. 1; 3.

Jonas Pontusson, “The Politics of Inequality and Partisan Polarization in OECD

Countries.”
Martin Gilens, “Inequality and Democratic Responsiveness: Who Gets What They
Want from Government?”

Week 13 (12/18): Summary and conclusions