Economics Versus Politics: Pitfalls of Policy Advice

By Daron Acemoglu, James A. Robinson. 2013

333 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/1f31163abe9ec692f044a93dcc163ea2d6c26e26

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Citations in the corpus

Evidence-based policymaking: promise, challenges and opportunities for accounting and financial markets research** (2018, neutral): “For qualitatively similar conclusions see Alston et al. (1992) and Fuller and Geide-Stevenson (2014). 18. See, for example, the IGM panel question on stock prices and market efficiency, which supports this conjecture. 19. See also Floyd and List (2016) and Section 5.3 in this article. 20. Chemla and”
State and Development: The Need for a Reappraisal of the Current Literature† (2016, background): “Acemoglu and Robinson (2012) in their recent remarkable book(8) also cite the case of the Glorious Revolution, resulting in a political pluralism, which along with centralization in England helped to secure private property rights against state predation and allowed private enterprise and capital ma”