European political economy: economic policy and public choice
This course introduces political economy to European students completely new to the subject. The conversational yet precise style of this course is an excellent way of presenting the economics of European politics and policy to tomorrow's decision-makers. The course is designed to provide students with a sound conceptual understanding of the subject using contemporary examples where possible. It stands out amongst all other introductory economics courses by stressing the fact that economic processes do not take place in isolation from social and political processes and by encouraging students to apply an economic way of thinking in their analysis of political processes. The course covers the most important topics in political economy while reflecting European economic structures and institutions and adapting the language and cultural references to a European audience. For instance, the euro is the basic currency referred to throughout the course, and case studies and examples largely refer to the European economy and EU policies. These features are apparent when dealing with the Common Agricultural Policy, the EU's external trade policy, competition policy, tax systems, ECB monetary policy under EMU. By the end of the course, students should be able to understand the effects on markets of government policies such as a the establishment of a minimum price, a price ceiling, a quota, or a subsidy; the effects of taxation and the design of optimal tax systems, market failure (imperfect competition, externatilies, public goods) and ways to deal with it, monetary policy, and fiscal policy. They should also be able to understand economic explanations of political processes such as voting, elections, lobbying, delegation to governments and courts, or EU treaty negotiation and enlargement.
1. Ten principles of economics. Thinking like an economist. Introduction to the scientific method. 2. Supply, demand, and public policies. The case of the EU's Common Agricultural Policy. 3. Market efficiency and the cost of taxation. Optimal tax systems. The case of VAT. 4. The efficiency of free trade and the cost of protection. The case of the EU and its common commercial policy. 5. Market failure: externalities, public goods, monopoly. The case of EU policies. 6. Production, growth, employment, inflation, income distribution. The case of the EU. 7. Monetary policy. The case of the ECB and monetary policy in the Eurozone. 8. Fiscal policy. The case of fiscal policy within EMU. 9. Introduction to rational choice theory I: spatial models of voting. The case of the EU. 10. Introduction to rational choice theory II: the subsidisation of bias. The case of elections and lobbying in the EU. 11. Introduction to rational choice theory III: the principal-agent problem. The case of the EU's executive and judicial politics. 12. Introduction to rational choice theory IV: club theory and the Exit-Voice-Loyalty (EVL) game. The case of EU enlargement and reform, and Brexit. 13. Introduction to rational choice theory V: selectorate theory. The case of EU treaty negotiation.
Mankiw, N. G., & Taylor, M. P. (2014). Economics. 3rd ed. Boston: Cengage Learning.