RESEARCH THEMES

 

Arye L. Hillman, Bar-Ilan University, Israel

 

 

 

 

 

My research focuses on political economy, which is the interface between economic and political decision making and studies public policy and the economic consequences of political decisions. Political economy was introduced into the modern economics literature by the public-choice school of thought. My research has used the political-economy framework to explain aspects of personal preferences for government policy outcomes and the political determination of public policy. 

 

International trade: My interest in political economy began in the field of international trade with a quest to understand why governments prevent people from trading with one another. I proposed that departures from free trade were explained by political benefits for political decision makers through the income-redistribution consequences of protectionist policies. The political-economy explanation for protectionist policies contrasted with the second-best efficiency arguments for departure from free trade that prevailed at the time in the literature.

 

International migration: In parallel, neo-classical models viewed international migrations as international movement of factors of production devoid of the fact that people with personal needs and imbued with presumptions of culture were migrating between countries. I adopted a political-economy approach to explaining voters’ preferences with regard to migration policy and to policy decisions.

  

Liberation of international trade: Trade liberalization was negotiated under the auspices of the GATT or WTO but political-economy aspects related to income distribution explained governments’ willingness to liberalize. Trade liberalization is an “exchange of market” whereby governments reciprocally compromise the perceived right of domestic producers have “property rights” to domestic markets.

 

Rent seeking: Rent creation and rent seeking, and also rent extraction, are accompaniments of a political-economy view of public policy. The theory of rent-seeking behavior directs attention to the social costs of political discretion through incentives for unproductive behavior.

 

Development failure: I have studied the political economy of development failure. Aid has been ineffective in helping the poor and promoting economic growth in low-income countries. A political-economy perspective explains development failure in terms of the personal objectives of rulers and ruling elites in poor countries.

 

The transition from socialism: Changing institutions and the introduction of private property rights through privatization changed personal opportunities and economic and political incentives. I was fortunate in having had the opportunity to visit many post-communist countries in the early years of transition as an advisor for the World Bank. My research on the political economy of transition was conducted with World Bank researchers.

 

Expressive behavior and behavioral political economy: Behavioral economics adds insights to understanding phenomena that cannot be explained using standard economic postulates of rationality. Expressive behavior is a departure from the standard representations of the sources of personal utility. I have studied how behavioral aspects and expressive behavior influences economic and political decisions. Public policy is affected through policy traps that arise when people expressively support public policies that they would veto if they could.

 

The economy and political-economy of Israel: The circumstances of the state of Israel, both internal and external, suggest questions for which the political-economy perspective allows answers to be proposed. I have been interested in the enigma of Israel in the context of international relations and the parallels between historical treatment of Jews and treatment of the modern Jewish state. 

 

The choice between markets and government policy: My textbook Public Finance and Public Policy: Responsibilities and Limitations of Government (Cambridge University Press, 1st edition 2003, 2nd edition 2009; Chinese, Russian, and Japanese translations of the 1st edition) covers the traditional topics of public finance and public policy while providing a political-economy perspective on the choice between markets and decisions of government.

 

 

Published research is grouped in the following categories.

 

 

RECENT PUBLICATIONS AND RESEARCH IN PROGRESS    link

 

BOOKS    link

 

 

RESEARCH PAPERS

 

Research papers are organized according to the following topics.

 

1. POLITICAL ECONOMY AND INTERNATIONAL ECONOMICS    link

1.1  Political economy of trade policy

1.1.1     The political economy of protection

1.1.2     Trade liberalization and globalization

1.1.3     The environment and trade policy

1.1.4     Market structure as a determinant of protection

1.1.5     The multinational firm and foreign investment

1.1.6     Protection as insurance

1.1.7     Trade embargoes

1.1.8     Incentives for illegal activity

1.1.9     Surveys

 

1.2   Comparative advantage and trade

1.2.1     True and “revealed” comparative advantage

1.2.2     The factor content of international trade

1.2.3     Departure from the law of one price

1.2.4     Domestic monopoly and dumping

1.2.5     Trade diversion as a prisoners’ dilemma

 

1.3   The political economy of international migration

1.3.1     The political economy of migration policy

1.3.2     Why do people emigrate?

1.3.3     Illegal immigration

1.3.4     Host-country benefits

 

1.4  Other papers and comments

 

2. POLITICAL ECONOMY AND PUBLIC POLICY    link

2.1  Behavioral political economy

2.2  Rent creation and rent seeking

2.2.1     The social costs of rent seeking

2.2.2     Institutions and the creation of rents

2.2.3     Survey of the rent seeking literature

2.3   Economic development and development failure

2.4   Paternalist policies

2.5   Public policy and public safety

2.6   Clubs, privilege, and exclusion

2.7   Other topics

 

3. SOCIALISM AND TRANSITION    link

3.1  Surveys

3.2   Rents and transition

3.3   Privatization

3.4   International trade policy in transition

3.5   Public finance in transition

3.6   Other aspects of transition

3.6.1     The rule of law

3.6.2     Economic statistics in the transition

3.6.3     Country studies

 

4. SHORT PAPERS, COMMENTS, POLICY PAPERS    link

4.1 The economy of Israel

4.2 Other papers and notes