Transcript ECONOMIC DEVELOPMENT & INTERNATIONAL POLITICS …

GLOBAL ECONOMIC RELATIONS
Course number DEVM 566, May 14 – May 25, 2012
James Raymond Vreeland
School of Foreign Service &
The Department of Government
Georgetown University
Who is this guy?
WEGG
What do professors really do?
• Teaching
• Service
• Research
My classes
• International Political Economy
– Economics: distribution of scarce resources
– Politics: the role of the state in such distribution
– International: how the flows of such resources across
borders plays a role
• Flows: goods & service (trade), money (capital mobility), people
(immigration), pollutants (the environment), violence (terrorism)
• International Organizations
– The ways international institutions impact these flows
• The IMF
– Specific financial flows
Pedagogy
• Substance
• Analytical tools
• Teaching to fish
Technology in the classroom
• Professor 2.0 – bring your laptops to class
• Syllabus: http://www9.georgetown.edu/faculty/jrv24/Vreeland_UNSAM.html
• Google:
http://www.google.com/search?q=james+vreeland&rls=com.microsoft:en-us&ie=UTF-8&oe=UTF-8&startIndex=&startPage=1
• Google scholar:
–
http://scholar.google.com/scholar?q=james%20vreeland&rls=com.microsoft:en-us&oe=UTF-8&startIndex=&startPage=1&um=1&ie=UTF-8&sa=N&hl=en&tab=ws
• Wikipedia?
Service
• (Meetings, committees)
• Advising students
• Service to the profession
– Conferences
– Reviewing research
– Giving talks…
Research
• Informs what I teach
• Keeps me on the cutting edge
• Signals to the world Georgetown faculty
strength
– Signal attracts great students (peers)
– Signals employers the university’s caliber
A current research project:
Global horse trading:
IMF loans for votes
in the United Nations Security Council
Who are you?
• Dream concert
• Favorite city
• Secret power
• What do you expect from this course?
The Syllabus
http://www9.georgetown.edu/facul
ty/jrv24/Vreeland_UNSAM.html
The assignment and grading
• Open to suggestions!
– (on the assignment, not your grades)
The assignment & credibility
http://www.youtube.com/watch?v=60Z61i-_XWU&feature=related
The generic problem of timeinconsistent preferences:
Individual’s preferences over time:
• Time 1: U(A)>U(B)
• Time 2: U(B)>U(A)
• Anticipating the change in preferences,
can the individual commit @ Time 1 to
choosing State A @ Time 2?
Examples:
• Classic: Ulysses & the Sirens
• Time 1=Before listening to the Sirens.
• Time 2=While listening to the Sirens.
• State A=Sailing home…
• State B=Belly of the beast…
Education:
• Principal=student.
• Delegates to agent=professor.
• Time 1: Beginning of the semester.
• Time 2: Any Thursday night.
• State A: State of knowledge.
• State B: State of… (Tombs).
• Hostages would like to commit to not pressing charges.
Time 1
H
(–,1)
Time 2
Promise
K
(–, 1)
Free
H
(0,2)
Testify
(T,-10 years)
Under democracy:
• Time 1: Voter elects a government that
offers incentives to firms to invest.
• Time 2: Voter elects a government to
tax the firm (expropriate the benefits
from investment).
Time 1
G
(0,0)
Time 2
Offer
F
Invest
(0,S)
Suppose that T>1>S>0
G
Expropriate
(1,1)
(T,0)
Note that this can happen under dictatorship too.
• Market-friendly dictator replaced by socialist
• Or the old dictatorship can change its mind!
• What if the dictatorship will be around a long time?
• REPUTATION!
• Is dictatorship more or less fickle than democracy?
• Are dictators around a long time?
Hazard Rate over Time for
Democracies (Solid Line) & Dictatorships (Dotted Line) – Time in years
Hazard R ate
0 .6 2 5
0 .5
0 .3 7 5
0 .2 5
5
10
15
20
Time (y ears)
More examples for
Time-inconsistent preference
problem…
Another government example:
• Government’s and monetary policy
• PBC?
– “Political-business cycle”
• Problem before elections?
65
Bread and Peace Voting in US Presidential Elections 1952-2008
60
1972
55
1956
1964
1984
1988
1996
50
2008
1992
1952
40
45
1976
1968
1980
2000
2004
1960
-2
-1
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16
Real income growth and military fatalities combined
Combination of real growth and fatalities weights each variable by its estimated coefficient.
Estimated fatalities effects: -0.7% 2008, -7.6% 1968, -9.9% 1952; negligible in 1964, 1976, 2004.
Source: www.douglas-hibbs.com
Solution?
Independent Central Banks
Marriage:
• Not needed if there is “true love” or “happily ever after.”
• Needed because we anticipate the possibility of “Time 2.”
• Time 2: U(B)>U(A)
• State A=Together
• State B=Sirens, Toads, etc…
• “Richer,” “health,” & “better” added for symmetry.
• “Poorer,” “sicker,” “worse” are the kickers.
Suggested readings
• Elster, Jon. 1990. Ulysses and the Sirens: Studies
in Rationality and Irrationality. New York:
Cambridge University Press.
• Elster, Jon. 2000. Ulysses Unbound. New York:
Cambridge University Press.
Other commitment
mechanisms?
Domestic and international
Institutions???
What is an institution?
The course take-away:
• What is an institution?
– A set of rules (structures/constraints/mechanisms)
that govern the behavior of a given set of actors in a
given context.
– An equilibrium?
• Institutions matter…
• The ways countries interact in the international arena
partly depends on their institutional context.
Themes
• Trade
• Finance
• Development
International Institutions
• The World Trade Organizations
(WTO/OMC)
• The International Monetary Fund
(IMF/FMI)
• The World Bank
Domestic Institutions
• Democracy vs. Dictatorship
• Also:
– Legislatures & political parties
– Veto players
– Federalism
– Central banks
– Exchange rate regime
Take-away points for today:
• Time-inconsistent preference / commitment problems
• Survival of leaders under democracy and dictatorship
• Economic performance and reelection
• What it means to EXPLAIN
– The "bridge" - proper nouns/dates & variables
• Malapportionment
• What is an institution? (a set of rules / an equilibrium)
– Reinforced through material self-interest of all relevant actors
Rest of the course:
Understand international cooperation
– Interests/Incentives
– Shaped by Institutions
• International
–
–
–
–
WTO
IMF
World Bank
United Nations
• Domestic
– democracy
– dictatorship
Break?
Thank you
WE ARE GLOBAL GEORGETOWN!