POSC 182 Lecture 28 2010

POSC 182 Lecture 28 2010 - POSC 182: Politics and Economic...

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POSC 182: Politics and Economic Policy Review Lecture 28 March 12, 2010
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About the Final Exam Time : Tuesday, March 16 from 3-6pm Location : HUMN 400 ( Not UV 9) Bring : Scantron and Bluebook Format : 10 Multiple choice and 10 short answer Covers : Mostly the second half, but also some of the main concepts that were covered in both the first and the second half. Hint : Go over the lecture slides first, then the readings. Readings supplement the lectures. Review: On Friday in lecture
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Test Policies Cutoff Time: If you arrive after 3:30, you will not be allowed to take the test. Bathroom breaks: One at a time. Bring test to the front, while you are in the bathroom. Use the bathroom before Seating: Every other seat Belongings: All materials should be stowed under your seat in a bag. Hats turned backwards Cheating will result in an F for the course. It’s not worth it.
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Political Economic Framework Economic Performance (t) De Jure Political Power (t) Distribution of Resources (t+1) Political Institutions (t) Distribution of Resources (t) De Facto Political Power (t) Political Institutions (t+1) Economic Institutions (t) Ability to Overcome Collective Action Problem (t) Intl Econ Pressures (t)
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Endogeneity/Exogeneity of International Factors Is the following endogenous or exogenous to the form of economic institutions in a given country? IMF interventions • IMF policies are endogenous of domestic economic institutions since economic institutions affect IMF policies (the IMF tailors its policies for the local economy) and IMF policies affect domestic economic institutions Large changes in the price of tradable commodities such as coffee for small countries • For a small economy, the price of tradable commodities such as coffee is set by global supply and demand, not by the small economy. Small economies are “price takers” not “price setters”. Thus, any correlations between commodity prices and domestic economic institutions is likely points to a causal arrow going from commodity prices to economic institutions That is, world commodity prices affect domestic economic institutions and domestic economic institutions do not affect world commodity prices.
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Empirical Problems of Showing that Institutions Cause Income Growth Problems are: Endogeneity (Reverse Causality) – Richer countries can afford to enforce property rights Omitted Variable Bias – It could be something else that we don’t include in the equation—e.g. geography Property Rights Income Property Rights Income Omitted Variable?
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Economic Policy Regimes in Contemporary Context Laissez Faire “Growth will lift all boats” (trickle down economics) Antitrust Generally against intervention, but acknowledges monopolistic market failure Too little competition Regulatory – Pro market, but acknowledges that markets may not be equitable and have negative externalities Equal access to telephone service
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This note was uploaded on 10/05/2010 for the course POSC 182 taught by Professor Schuelenberg during the Spring '08 term at UC Riverside.

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POSC 182 Lecture 28 2010 - POSC 182: Politics and Economic...

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