Foundations of Political Economy (POL 584/ECO 576)

Foundations of Political Economy (POL 584/ECO 576)


Summary. The purpose of this course is to prepare students to do empirical research in political economy grounded on a theoretical analysis of strategic interactions. The course focuses on the estimation of dynamic and incomplete information games in Political Economy, including models of bargaining, strategic voting, strategic information transmission, political agency, electoral competition, and media bias. 


Contact Information & Logistics.

Instructor: Matias Iaryczower, 305 Fisher Hall,  email: [email protected]. Office Hours: TBD

Lectures: T-Th 10:30am-11:50 am, Room TBA.


Course Requirements & Grades.  Grades are based on the following weighting scheme: Assignments (50%), Presentations (20%), and a Final Paper (30%).  The Final Paper can be either an early draft of an original paper, a "replication" exercise of one of the papers covered with some substantial modification in the model or estimation technique, or a substantial review of a topic. 


Tentative Schedule.

Week 1: Voting in Committees: Private and Interdependent Values

  • Heckman, James J., and James M. Snyder Jr. "Linear probability models of the demand for attributes with an empirical application to estimating the preferences of legislators." Rand Journal of Economics (1997): S142-S189.
  • Poole, Keith T., and Howard Rosenthal. "A spatial model for legislative roll call analysis." American Journal of Political Science (1985): 357-384.
  • Poole, Keith T., and Howard Rosenthal. "Patterns of Congressional Voting." American Journal of Political Science (1991): 228-278.
  • Clinton, Joshua, Simon Jackman, and Douglas Rivers. "The Statistical Analysis of Roll Call Data." American Political Science Review (2004): 355-370.
  • Londregan, John. "Estimating legislators' preferred points." Political Analysis 8.1 (1999): 35-56.
  • Iaryczower, Matias and Matthew Shum, "The Value of Information in the Court: Get it Right, Keep it Tight,"  American Economic Review, Vol. 102, No. 1, Feb. 2012, pp. 202-237. 


Week 2. Deliberation.

  • Hansen, Stephen, Michael McMahon, and Andrea Prat. "Transparency and deliberation within the FOMC: a computational linguistics approach." The Quarterly Journal of Economics 133.2 (2018): 801-870.
  • Iaryczower, Matias, Xiaoxia Shi, and Matthew Shum, "Can Words Get in the Way? The Effect of Deliberation in Collective Decision-Making." Journal of Political Economy 126.2 (2018): 688-734.
  • Lopez-Moctezuma, Gabriel. "Sequential Deliberation in Collective Decision-Making: The Case of the FOMC". Working Paper, 2015.
  • Chan, J., Lizzeri, A., Suen, W., & Yariv, L. (2018). Deliberating collective decisions. The Review of Economic Studies85(2), 929-963.


Weeks 3-4. Voting in Large Elections.

  • Coate, Stephen, Michael Conlin, and Andrea Moro. "The Performance of Pivotal-Voter Models in small-scale Elections: Evidence from Texas Liquor Referenda," Journal of Public Economics 92.3 (2008): 582-596.
  • Kawai, Kei,  Yuta Toyama and Yasutora Watanabe, "Voter Turnout and Preference Aggregation". Typeset.
  • Kendall, Chad, Tommaso Nannicini, and Francesco Trebbi. "How do Voters Respond to Information? Evidence from a Randomized Campaign," American Economic Review 105.1 (2014): 322-353.
  • Gordon, Brett R., and Wesley R. Hartmann. "Advertising Competition in Presidential Elections," Quantitative Marketing and Economics 14.1 (2016): 1-40. 
  • Rekkas, Marie. "The Impact of Campaign Spending on Votes in Multiparty Elections," The Review of Economics and Statistics 89.3 (2007): 573-585.
  • Iaryczower, Matias, Galileu Kim, and Sergio Montero. ``Representation Failure.'' Typeset.  
  • Montero, Sergio, "Going It Alone? An Empirical Study of Coalition Formation in Elections," Typeset.
  • Kawai, Kei, and Yasutora Watanabe. "Inferring Strategic Voting," American Economic Review 103.2 (2013): 624-662.
  • Degan, Arianna, and Antonio Merlo. "Do voters vote ideologically?," Journal of Economic Theory 144.5 (2009): 1868-1894. 
  • Degan, Arianna, and Antonio Merlo. "A Structural Model of Turnout and Voting in Multiple Elections," Journal of the European Economic Association 9.2 (2011): 209-245.
  • Knight, Brian, and Nathan Schiff. ``Momentum and Social Learning in Presidential Primaries.'' Journal of Political Economy 118.6 (2010): 1110-1150.
  • Berry, Steven T., "Estimating Discrete-Choice Models of Product Differentiation,"  The RAND Journal of Economics(1994): 242-262.
  • Berry, Steven, James Levinsohn, and Ariel Pakes, "Automobile Prices in Market Equilibrium." Econometrica (1995): 841-890. 
  • Berry, Steven, James Levinsohn, and Ariel Pakes. "Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market," Journal of Political Economy 112.1 (2004): 68-105.
  • Petrin, Amil. "Quantifying the Benefits of New Products: The Case of the Minivan." Journal of Political Economy 110.4 (2002): 705-729.
  • Nevo, Aviv. "A Practitioner's Guide to Estimation of Random-Coefficients Logit Models of Demand,"  Journal of Economics & Management Strategy, 9.4 (2000): 513-548.
  • Ackerberg, Daniel, et al. "Econometric Tools for Analyzing Market Outcomes," Handbook of Econometrics 6 (2007): 4171-4276. 
  • Dubé, Jean‐Pierre, Jeremy T. Fox, and Che‐Lin Su. "Improving the Numerical Performance of Static and Dynamic Aggregate Discrete Choice Random Coefficients Demand Estimation." Econometrica 80.5 (2012): 2231-2267.


Week 5. Media Bias

  • DellaVigna, Stefano, and Ethan Kaplan. ``The Fox News effect: Media bias and voting.'' The Quarterly Journal of Economics 122.3 (2007): 1187-1234.
  • Gentzkow, M. and Shapiro, J. M. "What Drives Media Slant? Evidence From U.S. Daily Newspapers,"  Econometrica78.1 (2010): 35-71.
  • Martin, Gregory J., and Ali Yurukoglu. "Bias in cable news: Persuasion and Polarization." The American Economic Review 107.9 (2017): 2565-2599.
  • Snyder Jr, James M., and David Stromberg. "Press Coverage and Political Accountability." Journal of Political Economy118.2 (2010): 355-408.
  • Chiang, Chun-Fang, and Brian Knight. "Media bias and Influence: Evidence from Newspaper Endorsements.''  The Review of Economic Studies 78.3 (2011): 795-820.
  • Prat, Andrea. "Media power." Journal of Political Economy 126.4 (2018): 1747-1783.


Week 6. Media: Where do People get their news? 

  • Kennedy, Patrick J., and Andrea Prat. "Where do people get their news?." Economic Policy 34.97 (2019): 5-47.
  • Guess, Andrew. "(Almost) Everything in Moderation: New Evidence on Americans' Online Media Diets." Forthcoming American Journal of Political Science.


.Week 7.  Political Agency I  

  • Ferraz, Claudio, and Frederico Finan. ``Electoral accountability and corruption: Evidence from the audits of local governments.''  American Economic Review 101.4 (2011): 1274-1311.
  • Eric Avis,  Fred Finan, and Claudio Ferraz. ``Do Government Audits Reduce Corruption? Estimating the Impacts of Exposing Corrupt Politicians.''  Forthcoming, Journal of Political Economy
  • Sieg, Holger, and Chamna Yoon. "Estimating Dynamic Games of Electoral Competition to Evaluate Term Limits in US Gubernatorial Elections," American Economic Review (2016).


Week 8. Estimating Dynamic Games: Tools

  • Rust, John. ``Structural estimation of Markov decision processes.'' Handbook of Econometrics 4 (1994): 3081-3143.
  • Hotz, V. Joseph, and Robert A. Miller. "Conditional choice probabilities and the estimation of dynamic models." The Review of Economic Studies 60.3 (1993): 497-529.
  • Bajari, Patrick, C. Lanier Benkard, and Jonathan Levin. "Estimating dynamic models of imperfect competition."  Econometrica 75.5 (2007): 1331-1370.
  • Pesendorfer, Martin, and Philipp Schmidt-Dengler. "Asymptotic least squares estimators for dynamic games." The Review of Economic Studies 75.3 (2008): 901-928.
  • Aguirregabiria, Victor, and Pedro Mira. "Dynamic discrete choice structural models: A Survey." Journal of Econometrics 156.1 (2010): 38-67.
  • Arcidiacono, Peter, and Paul B. Ellickson. "Practical methods for estimation of dynamic discrete choice models.''  Annual Review of Economics  3.1 (2011): 363-394.
  • Su, Che-Lin, and Kenneth L. Judd. "Constrained optimization approaches to estimation of structural models." Econometrica 80.5 (2012): 2213-2230.


Week 9. Political Agency II

  • Diermeier, Daniel, Michael Keane, and Antonio Merlo. "A political economy model of congressional careers."  The American Economic Review 95.1 (2005): 347-373.
  • Lim, Claire, "Preferences and Incentives of Appointed and Elected Public Officials,"  American Economic Review, 2013, 103 (4), pp.1360-1397. 
  • Iaryczower, Matias,  Gabriel Lopez Moctezuma and Adam Meirowitz. "Career Concerns and the Dynamics of Electoral Accountability". Typeset.


Weeks 10-11. Bargaining

  • Sieg, Holger. "Estimating a bargaining model with asymmetric information: Evidence from medical malpractice disputes." Journal of Political Economy 108.5 (2000): 1006-1021.
  • Silveira, Bernardo S. ``Bargaining with asymmetric information: An empirical study of plea negotiations.'' Econometrica 85.2 (2017): 419-452.
  • Knight, Brian. "Estimating the value of proposal power." American Economic Review 95.5 (2005): 1639-1652.
  • Diermeier, Daniel, Hulya Eraslan, and Antonio Merlo. "A structural model of government formation." Econometrica71, no. 1 (2003): 27-70. 
  • Francois, Patrick, Ilia Rainer, and Francesco Trebbi. "How is power shared in Africa?." Econometrica 83.2 (2015): 465-503.


Week 12.  Topics

  • Canen, Nathan, Chad Kendall, and Francesco Trebbi. "Unbundling polarization." Econometrica 88.3 (2020): 1197-1233.
  • Weese, Eric. "Political mergers as coalition formation: An analysis of the Heisei municipal amalgamations." Quantitative Economics 6.2 (2015): 257-307.
  • Garcia-Jimeno, C. (2016), "The Political Economy of Moral Conflict: An Empirical Study of Learning and Law Enforcement Under Prohibition". Econometrica, 84: 511-570.
  • Acemoglu, Daron, Camilo García-Jimeno, and James A. Robinson. "State capacity and economic development: A network approach." American Economic Review 105.8 (2015): 2364-2409.
  • Goldberg, Pinelopi Koujianou, and Giovanni Maggi. "Protection for sale: An empirical investigation." American Economic Review 89.5 (1999): 1135-1155.
  • Finan, Frederico, and Laura Schechter. "Vote‐buying and reciprocity." Econometrica 80.2 (2012): 863-881.
  • Goeree, Michelle Sovinsky. "Limited information and advertising in the US personal computer industry." Econometrica 76.5 (2008): 1017-1074.
  • Delavigna, Stefano, ``Structural Behavioral Economics''. Working Paper 2017.
  • Canen et al: "Endogenous Networks and Legislative Activity''.
  • Bagwe, Gaurav, "Courting Legal Change: Dynamics of Voting on the U.S. Supreme Court". Typeset. 


Final Exam.