PLSC 659b
Spring 2008, Tuesday 7:00-8:50p, 8 Prospect Street Room 121

Instructor: James Raymond Vreeland
Campus Address: 124 Prospect Street, Room 305
Phone: 432-6220
Fax: 432-6196
Office Hours: Tuesday 1pm-3pm or by appointment

This web-syllabus is designed to be used throughout the semester. Below you will find links to the readings for each of the 13 class sessions throughout the semester. Where possible, reading assignments have been linked to electronic versions available on the Internet. Otherwise, the assignment is available at the library/Labyrinth bookstore. Students visiting this page for the first time should read through the entire syllabus: the course description, the course requirements, the reading and the course outline. If you have any questions or comments about the web page or the course, please contact me.

  • Course Description
  • Requirements
  • January 15: Introduction
  • January 22: Background
  • January 29: Trade Policy- factors & sectors, voters & politicians
  • February 5: Trade Policy- institutions
  • February 12: International Capital Mobility
  • February 19: Capital Mobility, Exchange Rates, & Macroeconomic Policy
  • February 26: International Monetary Systems & Exchange Rate Regimes
  • March 4: Foreign Direct Investment
  • March 25: Sovereign Debt
  • April 1: Foreign Aid
  • April 8: The Political Economy of International Organizations
  • April 15: IPE and Political Regime
  • April 22: Migration and Remittances

  • Course Description:

    Economics is the study of the production, distribution, and consumption of scarce resources. Political economy considers the role that the state plays in such production, distribution, and consumption. International Political Economy (IPE) considers the flows of such production, distribution, and consumption across national borders, recognizing that not just national governments play a role, but foreign governments and international institutions must also be taken into account.

    So, what role do domestic, foreign, and international institutions play in the economy? Consider the historic debate within the field of traditional political economy. The fundamental theorems of welfare economics teach us that (1) under various conditions, competitive allocations are pareto efficient, and (2) any point on the contract curve can be reached by an appropriate re-initial endowment. In other words, there is little role the state should play in the economy, either for issues of efficiency or for issues of equality. The beauty of these theorems is that best outcomes result from individual actors pursuing self-interest without the intervention of a any centralized authority. The study of political economy should thus be devoted to understanding the ways in which centralized authorities intervene in the pristine market.

    Of course, one of the most amazing features of the fundamental theorems of welfare economics is just how fragile the results are when the certain assumptions are relaxed. The traditional market failures - such as externalities, monopolies, and public goods - open room for improvement: a welfare-maximizing government can beneficially intervene in the economy.

    But if economic actors are self-interested, why should we assume that governments are altruistic? The actions of self-interested individuals may not produce best results, but this does not necessarily mean that the state can do any better. There is room for improvement, but a self-interested government may actually make matters worse. Defenders of the market argue that there are decentralized solutions to traditional market failures that are superior to the solutions offered by the centralized authority embodied by the state.

    Yet, contemporary market failures - such as those deriving from problems of imperfect information, uninsurable risks, moral hazard, and adverse selection - present much more difficult challenges to defenders of the market. Indeed, problems of missing markets indicate that the single monolithic “market” is a myth. Markets are incomplete and there is ample room for even a self-interested government to improve outcomes by intervening in the economy. Contemporary political economy, thus, focuses on the interaction of centralized and decentralized mechanisms of allocation, recognizing that both may play a positive role, in both a normative and empirical sense.

    This approach must be pushed further. National governments do not operate in a vacuum. There is an INTERNATIONAL context!

    The study of International Political Economy has come to include many questions surrounding international relations and political economy. Perhaps the most fundamental question is:

  • How do domestic and international politics influence the economic relations between states?
  • Note that the phenomenon we are trying to explain – the dependent variable – is typically an international one, involving the flow across borders of either goods (trade policy), capital (financial and exchange rate policy), the location of production (foreign investment policy), or people (migration).

    What if the cross-border flow is considered to be the causal variable being used to explain some domestic political or economic outcome? Because problems of endogeneity, it is often important to consider causality running in both directions. Accordingly, we will also consider questions such as:

  • How do the economic relations between states influence domestic and international politics?
  • How do the political relations between states influence domestic and international economics?
  • So, broadly conceived, the field of International Political Economy is concerned with how politics influence economics and vice versa, where at least one of the variables is international.

    This course addresses the major theoretical debates in the field and introduces the chief methodological approaches used in contemporary analyses. We focus attention on the four types of cross-border flows mentioned above, and the policies – set forth by domestic and international institutions and arrangements – that regulate these flows.

    As in political economy, we will typically be grappling with centralized versus decentralized mechanisms of allocation, where the two mechanisms often interact. What distinguishes IPE as an important field of study is the fundamental recognition that decentralized mechanisms of allocation have impacts across borders. The decision in one country to allow the decentralized free flow of goods and services across borders, and the decision of another country to have a centralized fixer of the exchange rate impact one another. Moreover, the institutions that embody centralized mechanisms of allocation may be domestically located in one country, or be located in an international institution governed jointly by many different national governments.

    The challenges of trying to understand the interests, institutions, and information of actors in an international context are great, and the field of IPE is still so young that much remains to be learned. Nevertheless, since the publishing of the first IPE textbook in 1977 (Spero), tremendous strides have been made. This course presents a sampling of the finest work in the field. The work is demanding but extremely rewarding. And the course is designed not just to familiarize you with the literature, but also to stimulate your curiosity to pursue new research questions. An important goal of the course is also the equip you with the analytical tools required to pursue such research.


    We meet once weekly to discuss each week’s readings. All students are responsible for being prepared to discuss the required readings. Furthermore, each student will be designated to co-lead with another student class discussion in two different weeks. The seminar leaders will circulate by email to class participants five discussion questions for the class meeting. (PLEASE EMAIL BY THE SUNDAY EVENING BEFORE CLASS.) The seminar leaders will also be charged with introducing the week’s topic by starting out class with a five-minute overview.

    In addition to regular participation and taking two turns at seminar leadership, each student must select one of two options for fulfilling the remaining course requirements:

    Option 1 – The Research Paper: Students selecting this option should write one 20-35 page paper. The paper can be co-authored and all papers (co- or single-authored) will be held to the same standard. The paper should be completed by the end of the exam period in May. In addition to the actual paper, students should meet with the instructor to discuss their topic by February 18 and submit a two to three-page outline by March 7. One particularly effective strategy for this paper is a replication and extension of previously published research.

    Option 2 – 5 (five) critical reviews/research proposals: Students choosing this option should write a critical review of the literature on a given week’s topic identifying key themes; strengths and weaknesses in theory, research design, and empirical methodology; and interesting topics for future research (a research proposal on a topic related to a given week’s readings is perfectly acceptable for your critical review). Students choosing this option should select five different weeks during the course to write essays. Each essay should be about five double-spaced pages and is due the day before that topic is discussed in class at 5pm. No late papers will be accepted for this option. Please leave a hard-copy in my mailbox and also electronically submit to your "drop box" on the "classes" server.

    Of these two options, the first is clearly preferred because it allows you to work on new research that will hopefully lead to a publishable paper. The second option is offered in recognition that it is not possible to conduct high quality, original research for every seminar that you take in graduate school. I highly encourage students to choose the first option if possible, but students will not be penalized for choosing the second. The requirements for the course will have the following weights:

  • Participation: 30%
  • Seminar Leader: 20%
  • Research Paper or 5 Weekly Essays: 50%

  • Course Outline

    January 15: Introduction to Political Economy

    January 22: Introduction to International Political Economy.

    January 29: Trade Policy- factors & sectors, voters & politicians. Class leader: Shreya Basu

    February 5: Trade Policy- international institutions and their interaction with domestic institutions. Class leader: William Hennessey

    February 12: International Capital Mobility. Class leader: Diva Dhar

    February 19: Capital Mobility, Exchange Rates, & Macroeconomic Policy. Class leader: Tao Zeng & Diego Flores

    February 26: International Monetary Systems & Exchange Rate Regimes. Class leader: Bradley Decker

    March 4: Foreign Direct Investment. Class leader: Thomas Kimberly

    March 25: Sovereign Debt. Class leader: Dominik Zurakowski

    April 1: Foreign Aid. Class leader: Jee Hye Kim

    April 8: The Political Economy of International Organizations. Class leader: Mehran Gul

    April 15: IPE and Political Regime. Class leader: Alexander Starr

    April 22: International Migration. Class leader: Tochi Onyebuchi