Professor Torben Iversen Institute for Quantitative Social Science CGIS N-305

Office Hours: By appointment


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 at

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.

Papers: 20% each Final: 35% Participation: 25%

- 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 defamilialization 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), 14379. 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

Master your semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master your semester with Scribd & The New York Times

Cancel anytime.