We analyze investment decisions when information is costly, with and without delegation to an agent. We use a rational-inattention model and compare it with a canonical signal-extraction model. We identify three "investment conditions". In "sour" conditions, no information is acquired and no...

The last decade witnessed an unprecedented economic growth in Emerging Market Economies (EMEs). EMEs have also been the main drivers of growth in the recovery following the global financial crisis. Nevertheless, EMEs continue to face a number of institutional and structural challenges that may...

The institutional foundation of economic growth extends beyond institutions that limit the grabbing hand of the state and effectively enforce contracts. Growth predicates on social institutions that foster the development and use of productivity-enhancing knowledge. In particular,...

The hypothesis that economic freedom and related variables are significant determinants of real per capita income and growth is critically evaluated. Economic freedom is found necessary for higher levels of per capita income and growth largely in terms of threshold effects as opposed to...

This paper develops a general equilibrium model of fertility and human capital investment under uncertainty. Uncertainty exists in the form of a probability that a young adult does not survive to old age. Parents maximize expected utility arising from own consumption, their fertility, and the...

The paper uses the recently available data on growth rates, democracy, protectionism, and wars over the period 1820 to 2000 to look at the determinants of economic growth over the long-term. It is motivated by the following questions: what is the effect of democracy on growth, was colonialism...

We study the evolution of belief systems that suppress productive effort. These include concerns about the envy of others, beliefs in the importance of luck for success, disdain for competitive effort, and traditional beliefs in witchcraft. We show that such demotivating beliefs can evolve when...

This article re-examines the relationship between constitutional monarchy and economic growth in Europe. We suggest that economic growth explains the survival of constitutional monarchy rather than vice versa. The empirical results are consistent with our hypothesis