The economist must possess a rare combination of gifts.

He must be mathematician, historian, statesman, philosopher – in some degree.

J.M. keynes

It is probably with this inspiration that the field of political economy has originated.

Political economy involves the study of the reciprocal interactions between markets and political insititutions, in order to try and answer ultimate questions such as:

Are policy-makers of any use to economic prosperity? If yes, which forms of government are better suited at improving welfare?

Empirical political economists often contextualise these questions into history, aiming to isolate the policies of the past that contributed to present economic conditions. By means of such an evaluation – if positive – we can learn to preserve these policies in a time of hightened uncertainty, or find out new ways to design development programs.

When empirics cannot sustain the analysis, political economy models set up the conceptual assumptions and mathematical symplifications, under which validity some potential institutional reforms can be beneficial to our society.