Lecture 1

Question 1

Mercantilism

Answer 1

 Close to realism
 Focuses on state as main unit of analysis, rather than subnational interests
 Assumption -> states use economic policy to increase power
 National power comes from economic power
* Back in the day meant = who has the biggest pile of gold

Question 2

Liberalism

Answer 2

 Countries and individuals gain from trade by exploiting comparative advantage
* Focuses mainly on individual welfare
 No harm in engaging in trade
* A rising tide lifts all boats
* All trade is good, not just a positive balance
 Implication is that role of state should be limited

Question 3

Marxism central factors

Answer 3

 Not the policy prescriptions but the theory underlying them
 2 central factors (players)
* Capital (means of production, owned by bourgeoisie) and wage labour (proletariat)
 Subsistence wage for laborers, capitalists keep surplus
 Capital becomes more concentrated and less profitable
 Increasing inequality and eventual workers revolution that abolishes private property

Question 4

Modern approach

Answer 4

o Interest ideas and institutions
 The interaction between societal interest, how people interpret them and the political institutions that aggregate them into policy

Question 5

Interests

Answer 5

 Do you win or lose from a certain policy or proposed policy?
 Material interests can be shaped by endowments
* Factor of production (Land, labour (skilled and unskilled) capital)
* Industry (what kind of industries employs you (sector))
 “Tell me where you work and I’ll tell you your political preferences”
 context depending

Question 6

Ideas

Answer 6

 IPE scholars often start with assumption of objective economic interests, often quite accurate/useful simplification of messy reality
 Ideas and ideology can also matter
 Interpreting the facts
* Even among macro economists, there is no agreed upon economic theory
* What economic theory decision makers believe in informs policy choices
* individuals often use simplified mental models to understand the economy (private vs government household)

Question 7

What is an institution?

Answer 7

 A set of rules that governs behaviour
 Both enforced and unenforced
* QWERTY, driving on the right
 Domestic institutions
* Democracy, dictatorship, in between
* Presidential, parliamentary
* # of parties, electoral rules
 International institutions
* WTO
* UN
* EU
* IMF and world bank

Question 8

What drives political behaviour

Answer 8

Material, ideational and political incentives

Question 9

Cooperation in IPE

Answer 9

interaction in which 2 or more actors adopt politics that make at least one actor better off relative to the status quo without making others worse off

Question 10

Bargaining in IPE

Answer 10

an interaction in which actors must choose outcomes that make one actor better off at the expense of another, bargaining is redistributive, it involves allocating a fixed sum of value between different actors.
When actors bargain, they move along the pareto frontier

Question 11

Coordination as type of cooperation

Answer 11

actors benefit from all making the same choices and subsequently having no incentive not to comply

Question 12

Collaboration as a subtype of cooperation

Answer 12

actors gain from working together but nonetheless have incentives to not comply with any agreement

Question 13

Prisoner’s dilemma

Answer 13

shows that individual incentives often make cooperation difficult. Individual incentive to defect undermines the collective interest to cooperate. Simple model with strong implications

Question 14

Stag hunt

Answer 14

2 hunters can work together to kill a stag and feed their families well or individually hunt a rabbit. Outcome is indeterminate (depends on trust)

Question 15

Public goods

Answer 15

nonrival in consumption and nonexcludable. Achieving public goods is hindered by collective action problems

Question 16

Factors that facilitate cooperation

Answer 16

Institutions
number and relative size of actors
iteration, linkage and strategies of reciprocal punishment
Information

Question 17

Hegemonic stability theory

Answer 17

• Liberalization occurs when a hegemon exists to monitor and
  enforce the rules of the international trade regime (also applies
  to monetary policy)
• May help explain the global trading system
   Before WWI: British Hegemony
   After WWII: US Hegemony

Question 18

Mercantilists and export

Answer 18

mercantilists are in favour of export because the money you get in return is more for your pile of gold and import is therefore bad
o Was once partly true when state was the economy
* Exports vary in importance
o Manufactured goods are superior
* Implication – economy should be controlled in order to gain power
* The countries that export (increasing power) win, import loses(decreasing power)

Question 19

Hegemonic stability theory implications and evident in….

Answer 19

• Implications:
   As the hegemon’s power declines, so should international trade
• Evident against:
   We still see growing liberalization despite the US decline in share of
  trade
   Cooperation might be possible without a single power
   Iteration, institutions, information

Question 20

marxism contradiction and implication

Answer 20

 Inherent contradiction, people that are supposed to buy the goods, get such little wages so crises will follow
 Very pessimistic about politicians and state
 The state exists to protect capital, not labour
 Internationally, imperial exploitation of the global south by the global north
 Implication – revolution of the masses to abolish this system

Question 21

Modern approach, what drives political behaviour?

Answer 21

o What drives political behaviour
 Material (societal)
* Qui bono – whose welfare increases/decreases with different policy options?
 Ideational
* How do people/decision makers interpret their material interests/the state of the economy
 Political (institutional)
* What will keep leaders in office? What checks and balances are they subjected to?