Program on Political Economy Seminar

Zoom links for Political Economy Seminar are distributed via the seminar's mailing list. You can sign up for the list using this link: https://lists.iq.harvard.edu/mailman/listinfo/ppe_list

All interested faculty and students are invited to attend.

Today's presenter:

Gilat Levy (London School of Economics), "Misspecied Politics and the Recurrence of Populism" (with Ronny Razin and Alwyn Young)

Abstract

We develop a model of political competition between types that differ in their subjective model of the data generating process for a common outcome. We show that political competition does not weed out misspecified models which are simpler as they ignore some relevant policy variables. Specifically, periods in which those with a correctly specified and more complex model govern increase the specification error of the simpler world view, leading the latter to underrate the effectiveness of complex policies and overestimate the positive impact of a few extreme policy actions. Periods in which simple types implement their narrow world view result in subpar outcomes and a weakening of their omitted variable bias. Policy cycles arise, where each typeís tenure in power sows the seeds of its eventual electoral defeat.

Co-sponsored by FAS and IQSS, the Program on Political Economy (PE) supports research-related activities that integrate the study of economics and politics, whether by studying economic behavior in the political process or political behavior in the marketplace. In general, positive political economy is concerned with showing how observed differences among institutions affect political and economic outcomes in various social, economic, and political systems and how the institutions themselves change and develop in response to individual and collective beliefs, preferences, and strategies.