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Political institutions and the political economy of trade policy

Political institutions and the political economy of trade policy. March 30, 2009. Trade as an example. Clear incidence Winners and losers DWC Simple economic implications Identity of principal actors Preference intensity Externalities Close relationship to S-P (hence G-H).

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Political institutions and the political economy of trade policy

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  1. Political institutions and the political economy of trade policy March 30, 2009

  2. Trade as an example • Clear incidence • Winners and losers • DWC • Simple economic implications • Identity of principal actors • Preference intensity • Externalities • Close relationship to S-P (hence G-H)

  3. Adding institutions • How might institutions translate actor preferences into policy? • Aggregation of preferences • Internalization of externalities • Concentration, variable influence • Bias (positive, negative) • Different kinds of institutions • Social, electoral, legislative, etc.

  4. Social institutions • Aggregation: Social organization • Autoworkers or Baptists? • Farmers or Southerners? • Plumbers or whites? • Concentration and bias: Voluntary organizations • Unions, business associations, clubs • Clear impact on internalization of externalities • I.e. centralized vs. decentralized unions

  5. Electoral institutions • Cf. Cox: centripetal vs. centrifugal • Aggregation • Parties: strong, weak, centralized, decentralized • Concentration • Number of parties, chambers • Bias • Disproportionality • Pivotal regions, groups, parties

  6. Legislative institutions • Aggregation • Separation of powers with different functional constituencies • Concentration • Role of majority, opposition • Bias • Agenda control • Privileged branches

  7. Bureaucratic institutions • Aggregation as delegation • Who are the principals? How does delegation affect preference aggregation? • Concentration • Capture vs. oversight • Bias • Agenda control  capture, or welfare?

  8. On another dimension • Inter-temporal nature of trade and trade policy (and most others) • Dynamic effects of trade policy • Changing nature of constituents • Positive and negative dynamic effects on welfare • Time-consistency and trade policy • Time-varying incentives to policymakers, to interest groups • Difficulty of credible commitments

  9. Institutions and inter-temporal policymaking • Institutions and the dynamic effects of trade policy • Do they internalize long-term impact on interests, on welfare, on politicians? • Institutions and inter-temporal commitments • Do they facilitate, impede inter-temporal trades?

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