Political Economy in a Changing World

65 Pages Posted: 21 Jun 2013

See all articles by Daron Acemoglu

Daron Acemoglu

Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Georgy Egorov

Northwestern University - Kellogg School of Management; NBER

Konstantin Sonin

University of Chicago - Harris Public Policy; Higher School of Economics; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2013

Abstract

We provide a general framework for the analysis of the dynamics of institutional change (e.g., democratization, extension of political rights or repression of different groups), and how these dynamics interact with (anticipated and unanticipated) changes in the distribution of political power and in economic structure. We focus on the Markov Voting Equilibria, which require that economic and political changes should take place if there exists a subset of players with the power to implement such changes and who will obtain higher expected discounted utility by doing so. Assuming that economic and political institutions as well as individual types can be ordered, and preferences and the distribution of political power satisfy natural "single crossing" (increasing differences) conditions, we prove the existence of a pure-strategy equilibrium, provide conditions for its uniqueness, and present a number of comparative static results that apply at this level of generality. We then use this framework to study the dynamics of political rights and repression in the presence of radical groups that can stochastically grab power. We characterize the conditions under which the presence of radicals leads to repression (of less radical groups), show a type of path dependence in politics resulting from radicals coming to power, and identify a novel strategic complementarity in repression.

Suggested Citation

Acemoglu, Daron and Egorov, Georgy and Sonin, Konstantin, Political Economy in a Changing World (June 2013). NBER Working Paper No. w19158. Available at SSRN: https://ssrn.com/abstract=2282997

Daron Acemoglu (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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Georgy Egorov

Northwestern University - Kellogg School of Management ( email )

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NBER ( email )

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United States

Konstantin Sonin

University of Chicago - Harris Public Policy ( email )

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Chicago, IL 60637
United States

Higher School of Economics ( email )

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Moscow, 119017
Russia

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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