Endogenous Policy Theory: The Political Structure and Policy Formation

Pinhas Zusman, Gordon C. Rausser
January 1992  [90-GATT 27]

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Zusman, P. and G. Rausser. 1992. "Endogenous Policy Theory: The Political Structure and Policy Formation." CARD paper 90-GATT 27. Center for Agricultural and Rural Development, Iowa State University.


Models of economic systems involving government intervention by definition include some policy variables, or policy instruments, through which the policy in implemented. In general, economists have tended to view these variables as exogenously given. While convenient in dealing with some analytical problems, this attitude is not always adequate, as it abstracts from the realities of political-economic life. Evidently, economic policy is not independent of the economic structure, and policy variables are codetermined with endogenous economic variables within an integrated political-economic structure.