Using rainfall, public relief, and election data from India, we examine how governments respond to adverse shocks and how voters react to these responses. The data show that voters punish the incumbent party for weather events beyond its control. However, fewer voters punish the ruling party...

We develop a theory that explains how two core values – Respect for others and Responsibility – affect productivity, the accumulation of capital, and output per worker. Using data from the World Values Survey, we empirically test the model using a panel dataset that includes 82 countries...

We study the role of institutional development as a causal mechanism of history affecting current economic performance. Several indicators capturing different dimensions of early development in 1500AD are used to remove the endogenous component of the variations in institutions. These indicators...

Beyond years of schooling, educational content can play an important role in the process of economic development. Individuals' choices of educational content are often shaped by the political economy of government policies that determine the incentives to acquire various skills. We first present...

We map the relationship between products in global trade and the products a country exports as a network to devise a measure of the density of links between the products in a country's export basket and a measure of network proximity from a country's export basket to products that a country does...

The permanent income rule is seldom the optimal response to a windfall of foreign exchange, such as that from a resource discovery. Absorptive capacity constraints require domestic investment, and investment in structures requires non-traded inputs the supply of which is constrained by the...

The literature has shown that the implied welfare gains from financial integration are very small. We revisit these findings and document that welfare gains are substantial if capital goods are not perfect substitutes. We use a model of optimal savings where the elasticity of substitution...

We exploit annual variation in influential foreign interest rates to identify externally-driven components of short-run income shocks in small open economies from 1971 to 2004 and explore the statistical nature of the income–civil conflict nexus. Our results show that movements in foreign...

How can developing countries stimulate and sustain strong export growth? To answer this question, we examine 92 episodes of export surges, defined as significant increases in manufacturing export growth that are sustained for at least 7years. We find that export surges in developing countries...

The Washington Consensus emphasizes the economic costs of real exchange rate distortions. However, a sizable recent empirical literature finds that undervalued real exchange rates help countries to achieve faster economic growth. This paper shows that recent findings are driven by inappropriate...