What are the effects of increased trade in goods and services on the trade balance? We study the effects of reducing transport costs in a Ricardian model with complete asset markets. Trade integration has three effects on the structure of the economy: a reduction in the home bias in consumption,...

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...

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...

It is well known that business cycles in OECD countries exhibit a remarkable degree of synchronization. Much less known is that the peak of the OECD cycle is associated with high prices of labour-intensive products and low prices of capital-intensive ones. We document this cyclical behavior of...

China's economic success over the past three decades can be decomposed into three broad contributions to growth; accumulation of labor and capital, growth induced by structural transformation (i.e. the reallocation of labor and capital across sectors and ownership units), and growth in total...

Random response questions have been used as a survey technique to elicit candid responses to sensitive questions for half a century, despite relatively little evidence as to their effectiveness in doing so. We reconsider surprising recent evidence that random response questions apparently were...

Six dimensions of governance are estimated covering 199 countries and territories for four periods: 1996, 1998, 2000, and 2002. The indicators are based on several hundred individual variables measuring perceptions of governance drawn from 25 data sources constructed by 18 organizations. These...

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 regressions...

Well-functioning institutions matter for economic development. In order to operate effectively, public institutions must also inspire confidence in those they serve. We use data from the Gallup World Poll, a unique and very large global household survey, to document a quantitatively large and...

Progress in measuring governance is assessed using a simple framework that distinguishes between indicators that measure formal rules and indicators that measure the practical application or outcomes of these rules. The analysis calls attention to the strengths and weaknesses of both types of...