Economics versus Politics: Pitfalls of Policy Advice
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Acemoglu_Economics versus politics.pdf
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1 MB
Format
Adobe PDF
Checksum (MD5)
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Author(s)
Acemoglu, Daron
Robinson, James A
Date Issued
February 2013
Journal
Journal of Economic Perspectives
Publisher
American Economic Association
Citation
Acemoglu, Daron, and James A Robinson. “Economics versus Politics: Pitfalls of Policy Advice.” Journal of Economic Perspectives 27, no. 2 (February 2013): 173-192.
Version
Final published version
Abstract
The standard approach to policy making and advice in economics implicitly or explicitly ignores politics and political economy and maintains that if possible, any market failure should be rapidly removed. This essay explains why this conclusion may be incorrect; because it ignores politics, this approach is oblivious to the impact of the removal of market failures on future political equilibria and economic efficiency, which can be deleterious. We first outline a simple framework for the study of the impact of current economic policies on future political equilibria -- and indirectly on future economic outcomes. We then illustrate the mechanisms through which such impacts might operate using a series of examples. The main message is that sound economic policy should be based on a careful analysis of political economy and should factor in its influence on future political equilibria.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/jep.27.2.173
