We present a tractable stochastic endogenous growth model that explains how social capital influences economic development. In our model, social capital increases citizens' awareness of government activity. Hence, it alleviates the electoral incentives to under-invest in education, whose returns...

We argue that econometric analyses based on transition countries’ data can be vulnerable to structural breaks across time and/or countries. We demonstrate this argument by identifying structural breaks in growth regressions estimated with data for 25 countries and 16 years. Our method allows...

This Paper uses a large new panel data set to examine the relationship between elections and fiscal policy. We find clear evidence of political business cycles in macroeconomic policy: spending increases before elections while revenues fall, leading to a larger deficit in election years. We also...

We initiate examination of the political boundaries of the firm by exploring the phenomenon of ‘businessman candidates’: business owners and managers who bypass conventional means of political influence to run for public office themselves. We argue that in-house production of political...

What are the effects of institutional subversion on small business development, fiscal policies, economic growth, and firm performance? This Paper provides an empirical investigation of institutional subversion in Russia’s regions. We develop a complete account of preferential treatments to...

The determinants of government responsiveness to its citizens is a key issue in political economy. Here we develop a model based on the solution of political agency problems. Having a more informed and politically active electorate strengthens incentives for governments to be responsive. This...

In this paper we present stylized facts of the Greek economy that characterize the causes and the consequences of its ongoing crisis. Then, we offer an explanation that can account for those causes and consequences. This explanation is based on the view of Greek society as consisting of two...

Theory and empirics are ambiguous on the effect of democracy on growth. Cross-country studies find that democracy has no significant impact on growth. In contrast, within-country studies find a strong positive effect of transition to democracy. We reconcile this inconsistency by showing that the...

We analyze the joint dynamics of religious beliefs, scientific progress and coalitional politics along both religious and economic lines. History offers many examples of the recurring tensions between science and organized religion, but as part of the paper’s motivating evidence we also...

In 1795 the British took control of the Cape colony (South Africa) from the Dutch; and in 1843 they exogenously changed the legal basis of landholding, giving more secure property rights to landholders. Since endowments and other factors were held constant, these changes offer clean tests of the...