This course offers 6 ECs in less than six weeks (but four sessions per week), with oral exams before Christmas. It is, therefore, ideal for international students who cannot return after Christmas. Of course, it is also well-suited for regular economics students, IEB students, pre-Master students and students from other disciplines or faculties. This year, the course will be run on the basis of physical presence, although online participation will be made possible for students from abroad. Class meetings with online participation from a screen will be made possible, but there will be no weblectures (only live streaming) since course interaction is essential.
We focus on economic decisions taken under political constraints. We shall discuss market and government failures which can be caused by strategic decisions taken by consumers, firms, voters, policymakers, civil servants or lobby groups. In particular, we examine wasteful rent-seeking behaviour, the bureaucrat’s influence on an excessive budget provision, distortions created by interest groups and campaign contributions, and the underprovision problem of public goods. Other topics may be “paternalistic public policy”, “(expressive) voting”, or “the effect of political instability on public finance decisions”.
Overall, we study measures to protect ourselves against inefficiencies created by individuals, firms, interest groups and the government. How can we prevent (and regulate against) any form of manipulation and exploitation? We use and extend the concepts of welfare and equilibrium introduced in microeconomics, but also study the macroeconomic implications. Theoretical approaches are combined with case studies, empirical applications and policy recommendations.
The course programme is flexible, but consists of two main components: (i) formal teaching with assignments and working group meetings; (ii) student-led discussions (on self-chosen topics) which will be extensively prepared. Early on groups of 3 or 4 students will be formed, typically working together on both the assignments and the student-led discussions. In addition, we typically have at least two external presentations, one from Transparency International (the international corruption agency) and one from a representative of a Dutch ministry.