Political Economy

AAA

DEFINITION of 'Political Economy'

The study and use of how economic theory and methods influences political ideology. Political economy is the interplay between economics, law and politics, and how institutions develop in different social and economic systems, such as capitalism, socialism and communism. Political economy analyzes how public policy is created and implemented.

INVESTOPEDIA EXPLAINS 'Political Economy'

Because various individuals and groups have different interests in how a country or economy is to develop, political economy as a discipline is a complex field, covering a broad array of potentially competing interests. Political economy also involves the use of game theory, since groups competing for finite resources and power must determine which courses of action will give the most beneficial results, and what the probability of those results being reached are.

RELATED TERMS
  1. Pareto Efficiency

    An economic state where resources are allocated in the most efficient ...
  2. Game Theory

    A model of optimality taking into consideration not only benefits ...
  3. Nash Equilibrium

    A concept of game theory where the optimal outcome of a game ...
  4. Economics

    A social science that studies how individuals, governments, firms ...
  5. Pork-Barrel Politics

    A slang term used when politicians or governments "unofficially" ...
  6. Separation Of Powers

    An organizational structure in which responsibilities, authorities, ...
RELATED FAQS
  1. What is the difference between free enterprise and capitalism?

    Capitalism and free enterprise are often seen as synonymous. In truth, they are closely related yet distinct terms with overlapping ... Read Full Answer >>
  2. What are some of the limitations and drawbacks of economics as a field?

    Economics is a social science that examines how people produce, distribute, and consume goods and services. This means that ... Read Full Answer >>
  3. Who are cambrists and how do I become one?

    Cambrists (sometimes seen as "cambists," although the two terms aren't completely synonymous) are experts in the field of ... Read Full Answer >>
Related Articles
  1. Economics

    Adam Smith: The Father Of Economics

    This free thinker promoted free trade at a time when governments controlled most commercial interests.
  2. Investing Basics

    10 Books Worth Investing In

    Here are 10 financial services books that are informative and useful.
  3. Economics

    The History Of Economic Thought

    Economics is a vital part of every day life. Discover the major players who shaped its development.
  4. Personal Finance

    The History Of Capitalism: From Feudalism To Wall Street

    Find out how the economic system we now use was created.
  5. Economics

    Why Can't Economists Agree?

    There are many reasons why economists can be given the same data and come up with entirely different conclusions.
  6. Economics

    What Is The Labor Market Conundrum?

    We are facing a conundrum with investment implications: Why are wages still stagnant, when jobs are being created at the fastest pace since the late 90's?
  7. Economics

    Understanding Impairment

    In finance and accounting, impairment refers to the loss of value of a company’s capital stock.
  8. Economics

    What is a Promissory Note?

    A written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.
  9. Savings

    How Microeconomics Affects Everyday Life

    Microeconomics is the study of how individuals and businesses make decisions to maximize satisfaction. Microeconomic principles can describe many everyday experiences. We use renting a New York ...
  10. Personal Finance

    Why Are Tesla Cars So Expensive?

    What makes Tesla cars so expensive? Short supply and pricey parts is a good place to start.

You May Also Like

Hot Definitions
  1. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  2. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  3. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  4. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  5. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  6. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
Trading Center