Working Paper: NBER ID: w19631
Authors: Dani Rodrik
Abstract: The contemporary approach to political economy is built around vested interests - elites, lobbies, and rent-seeking groups which get their way at the expense of the general public. The role of ideas in shaping those interests is typically ignored or downplayed. Yet each of the three components of the standard optimization problem in political economy - preferences, constraints, and choice variables - rely on an implicit set of ideas. Once the manner in which ideas enter these frameworks is made explicit, a much richer and more convincing set of results can be obtained. In particular, new ideas about policy--or policy entrepreneurship--can exert an independent effect on equilibrium outcomes even in the absence of changes in the configuration of political power.
Keywords: political economy; policy innovations; interests; ideas
JEL Codes: F50; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ideas held by political agents (D72) | preferences and choices (D01) |
| preferences and choices (D01) | political outcomes (D72) |
| new ideas about policy (E65) | equilibrium outcomes (D51) |
| ideas (O36) | shifts in political transformation frontier (P27) |
| shifts in political transformation frontier (P27) | policies adopted by elites (D72) |