Political Economy in Practice: The Foundations for Policy, Management and Independent Economic Regulation

The text is designed for courses in the areas of applied political economy. Its five sections are
intended to integrate economics with accountancy, and provide a foundation of analytical
examples. The application of political economy ideas to important policy questions follows, and
concludes with the design of the regulatory framework for a modern state. By combining a
wide range of the elements which feature in political economy as a subject, the text can provide
a useful complement to a specialist course textbook which focuses on one element alone, such as
Economics 12th edition, Lipsey and Chrystal, OUP, 2011. It can be used as a main course text
in its own right, and is intended for both undergraduate and postgraduate courses. The
emphasis is on practical applications, which makes the course text suitable for general courses in
universities, as well as in other centres of education, particularly government and professional
bodies. Worked examples and algebraic formulae are used where necessary. The analytical
examples in section III have been chosen to cover those areas which are often less fully covered
in standard textbooks. These include:
* Reconciling investment decision rules in terms of NPV with ‘modified’ internal rates of return.
* Introducing the ‘opportunity cost of deferral’ as the appropriate measure for investment
decisions on mutually exclusive projects subject to capital rationing.
* Integrating joint processes and by-products, further processing and recovery of ‘common’
fixed costs in optimising production decisions and pricing.
* Identifying ‘annuity’ depreciation profiles as the economic foundation of depreciation.
The text is designed to be suitable for courses in different countries because where a UK
example of applied political economy has been used it is because it has international relevance.
In particular, this includes the use of price control rather than profit control in regulating
privatised utilities and network industries, as well as the economic history of privatisation from
1984 to 2013; the development of accounting standards from professional self-regulation to the
adoption of international accounting standards; and the recognition that an effective regulatory
state requires effective accountability along with appropriate institutional structures.