New Directions in Political Economy and Trade

National Bureau Of Economic Research Inc, Cambridge MA

Investigators

Abstract

This research investigates the relationship between economic and political decision-making. The first part of the research tries to answer the questions: What role do lobbyists play in a democratic system? The standard view of lobbying used by most trade theorists is that it is a simple quid pro quo---a paradigm of "protection for sale." While there is an element of truth in this practice, this research offers an alternative interpretation: Some interest groups expend costly resources in order to show policy makers how much protection matters to the block of voters they represent, thereby influencing the political incentives faced by legislators. This interpretation implies that lobbying is seen as providing information to policy makers. The second part of this research analyzes the importance of 'swing states,' or states that have no strong party loyalty, in the determination of trade policy. This research models swing states as often receiving favorable treatment because they are valuable prizes in elections, an approach that is missing from most formal models of trade policy making because they do not incorporate real-world institutions such as the electoral college. The third part of the research will provide new interpretations of the "fast-track" authority in US trade policy governance. This is a legislative device by which the Senate gives up in advance its right to amend a trade treaty. It is argued that interpretations from political science incompletely explain some relevant features of the legislation. The fourth and final part of the research addresses the political implications of media mergers. It examines an economic model of news organizations with both a profit motive and a political agenda, due to the political preferences of their owners. They can attempt to manipulate the opinions of the public, and thus political outcomes, by withholding news that is pejorative to their political views. The research examines the question: Under what conditions would the profit motive on its own ensure that the public receive a balanced supply of news, without the intervention of government watchdogs such as the Federal Communications Commission? Answers to these questions have enormous economic, political, and social consequences.