The validity of instrumental variables (IV) regression models depends crucially on fundamentally untestable exclusion restrictions. Typically exclusion restrictions are assumed to hold exactly in the relevant population, yet in many empirical applications there are reasonable prior grounds to...

This paper reports on the latest update of the Worldwide Governance Indicators (WGI) research project covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2006: voice and accountability, political stability and absence of violence, government...

Average incomes of the poorest quintile rise proportionately with average incomes in a sample of 92 countries spanning the last four decades. This is because the share of income of the poorest quintile does not vary systematically with average income. It also does not vary with many of the...

How do countries hold their financial wealth? We construct a new database of countries' claims on capital located at home and abroad, and international borrowing and lending, covering 68 countries from 1966-97. We find that a small amount of capital flows from rich countries to poor countries....

How do countries hold their financial wealth? We construct a new database of countries’ claims on capital located at home and abroad, and international borrowing and lending, covering 68 countries from 1966 to 1997. We find that a small amount of capital flows from rich countries to poor...

The article empirically examines the determinants of debt distress, defined as periods in which countries resort to any of three forms of exceptional finance: significant arrears on external debt, Paris Club rescheduling, and nonconcessional International Monetary Fund lending. Probit...

Business cycles are both less volatile and more synchronized with the world cycle in rich countries than in poor ones. We develop two alternative explanations based on the idea that comparative advantage causes rich countries to specialize in industries that use new technologies operated by...

Capital flows to developing countries are small and mostly take the form of loans rather than direct foreign investment. We build a simple model of North-South capital flows that highlights the interplay between diminishing returns, production risk, and sovereign risk. This model generates a set...