Political Economy
Political Economy
Political Economy
Kartei Details
| Karten | 53 |
|---|---|
| Sprache | English |
| Kategorie | Politik |
| Stufe | Universität |
| Erstellt / Aktualisiert | 07.01.2014 / 25.11.2015 |
| Weblink |
https://card2brain.ch/box/political_economy
|
| Einbinden |
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Incentive for entering politics
Phsychological Inventice
Economical Incentive
Hidden Type- who will enter Politics?
Good Politicans motivated by wage and public service
Baad Politicans motivated by wage and Rent Seeking.
On what depends the decision to enter politics in the hidden type model?
Rent
Market income if not elected
Politicans Wage
Outside income if elected
--> High skilled individuals may shy away if wage as politican is too low. A higher wage may increase the qualitiy of politicans
Effects of higher wages for Politicans
positive impact on congruence between voters and politicans
positive correlation between wage and governors characteristics
higher wages attract higher qualified candidates
higher wages improve productivity
5 Institutions which are crucial to shaping the quality of a politican
political party
electoral rule
governement structure
size of governement
degree of political competition
for socio economic variables that make democracy work
Information
Education
Equality
Social Capital
4 Plus Points to Democracy
entry of new firms
lower political instability
smoother governement change
better at coping with external shocks
4 Minus Points to Democracy
no effect on economic growth
low private investments
high governement spending
populism
The Role of Social Capital in producing good democracy
interaction between citizens helps cirtalizing an formin an opposition to a non democratic regime
Once established interaction helps maintain the democracy
participation in civil interaction enhances a feeling of duty and interdependence with others
Interaction enhances the flow of information and helps to form equal expectations which makes behaviour more predictable
Interaction helps creating norms
Role of Information in Democracy
In the principal agent model elected politicans have incentive for moral hazard and rent seeking, This incentive lowers with better information of the voters (behaviour)
The secend Problem is information about the politicans characteristica like talent. (Adverse selection if limited information)
Role of Education in Democracy
(part of modernization hypothesis -->education leads to higher level of democracy) Educated people are willing to fight for democracy.
Education teaches people to interact with each other and helps so builiding up social capital
Education helps citzizens to elect able leaders
Adverse selection problem and moral hazard can be solved by education
Role of Inequality for Democracy
High level of income inequality rises the demand for redistribution (Tyranny of majority) This will lead to high taxes low investments an lowe growth.
An efficent democracy (can enforce property rights) can not emerge from societiey with high inequality.
Democracy produces onl better rule of law when inequality is low
Two issues democracy helps to solve for oligarchs
commitment issue (commit credible rights to people)
efficent reforms (secure property rights, provide public good, curb corruption)
