Relationship between economics and political economy

Political economy - Wikipedia

relationship between economics and political economy

As election outcomes are apparently random, elected politicians have no incentive to deliver good economic performance on their watch. A politico-economic model is defined, in which consumers, at date 0, decide how much to invest in a firm (and how much of its stock to purchase), whose. Political economy is the study of production and trade and their relations with law, custom and Political economy, where it is not used as a synonym for economics, may refer to very different things. From an Much of the political economy approach is derived from public choice theory on the one hand and radical political.

There were just as many economists suggesting this was not a good idea, but economists can be promoted by their political sponsors. In the US, the Paul Ryan budget proposals were welcomed by many Republicans because they promised tax cuts for better off, cutting welfare benefits and balancing the budget.

Many economists may be generally supportive of the EU and European co-operation, but the evidence from the Euro single currency is that it caused many economic problems of low growth, deflation and trade imbalances.

Economics needs political support If you study economics, you can make quite a convincing case for a Pigovian tax — a tax which makes people pay the full social cost of the good, and not just the private cost.

This principle of making the polluter pay provides a case for Carbon Taxcongestion charges, alcohol tax, and tobacco tax e. However, whether these policies get implemented depends on whether there is political support for them. For example, a congestion charge was proposed for Manchester, but it was very heavily defeated in a referendum.

The relationship between economics and politics | Economics Help

A new tax is rarely popular. As an economist, I would like to see more congestion charging because it makes economic sense. The political appeal of austerity Another interesting example is the political appeal of austerity.


After the credit crunch, there was a strong economic case for expansionary fiscal policy to fill in the gap of aggregate demand. Politically, it can be hard to push a policy which results in more government debt. Another interesting case is the relationship between fiscal policy set by government and monetary policy largely set by independent Central Banks In the UK and US and Europe fiscal policy has been relatively tight, given the state of the economy.

New political economy which may treat economic ideologies as the phenomenon to explain, per the traditions of Marxian political economy.

Political economy

Maier suggests that a political economy approach "interrogates economic doctrines to disclose their sociological and political premises It also informs much work published in New Political Economy, an international journal founded by Sheffield University scholars in In the United States, these approaches are associated with the journal International Organizationwhich in the s became the leading journal of IPE under the editorship of Robert KeohanePeter J. Katzenstein and Stephen Krasner.

Because these regimes influence and are influenced by the organization of both social and economic capital, the analysis of dimensions lacking a standard economic value e.

Historians have employed political economy to explore the ways in the past that persons and groups with common economic interests have used politics to effect changes beneficial to their interests. In the s and s, legal realists e. Robert Hale and intellectuals e.

relationship between economics and political economy

John Commons engaged themes related to political economy. In the second half of the 20th century, lawyers associated with the Chicago School incorporated certain intellectual traditions from economics. Debunking simplistic narratives is one thing, but does a rigorous, data-based analysis show any relationship, in the aggregate, between good economic management by incumbent governments and their subsequent re-election prospects?

relationship between economics and political economy

Here, too, evidence is mixed. In the former two categories, there is some correlation between incumbency and higher growth rates during the incumbency period, while the relationship is weaker in the anti-incumbency states.

relationship between economics and political economy

Of course, correlation does not prove the existence of a causal relationship, suggestive though it may be. Yet such findings are very fragile in a statistical sense. It is tempting but ultimately unhelpful to draw the nihilistic conclusion that as election outcomes are apparently random, elected politicians have no incentive to deliver good economic management which hopefully translates into good economic performance on their watch.

For, if it is difficult to prove that good economics is good politics, it is equally difficult to prove that bad economics is good politics.