This book raises and addresses questions about the consequences of democratic institutions for economic performance. Do institutions of accountability inside and outside government through periodic elections produce efficient results, or do they lead to the kind of accumulation of special privileges and protections from market competition that reduces efficiency and growth? Professor Keech suggests that there are modest and bearable costs of democratic procedures, comparable to the agency costs incurred whenever a principal delegates authority to an agent. Democracy, however, does not systematically cause inferior macroeconomic policy detrimental to a population's long-term welfare. Rather, there is a logical circularity among voter preferences, institutions, and economic and political outcomes. This accessible synthesis and sharp perspective will be highly useful for professionals, graduate students, and upper-level undergraduates aiming to understand the relationship between politics and economics.
• Well-written, highly accessible analysis of the relations between the economy's performance and electoral cycles/voting and political outcomes • Brilliantly balances research and policy features; demonstrates lack of accountability and voters' participation has costs we all pay in democratic institutions • Primarily US-focused, but includes analysis of other countries where relevant
Part I. Introduction: 1. Macroeconomic politics and the costs of democracy; 2. Macroeconomic theories and their political implications; Part II. Models of Routine Politics: 3. Models of accountability and opportunism: the electoral cycle; 4. Models of choice: partisanship; Part III. The Sources and Authority of Macroeconomic Goals: 5. The authority of macroeconomic goals; 6. Voters, elections, accountability, and choice; Part IV. Institutions and Processes: 7. Discretion and accountability in the fiscal policy process; 8. Discretion and accountability in the monetary policy process; Part V. Conclusion: 9. The costs of democracy; References; Index.