Colin O'Reilly
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Scholarly Publications:
Integrating the Economic Way of Thinking into US History Courses
(with Scott Neiderjohn)
Chapter in: J. Hall and K. Lawson (eds). Teaching Economics. Springer, (2019).
(with Scott Neiderjohn)
Chapter in: J. Hall and K. Lawson (eds). Teaching Economics. Springer, (2019).
Link to: Integrating the Economic Way of Thinking into US History Courses
Can the economic way of thinking be integrated into high school and middle school US history courses? We introduce an instrument, the Test of Economic Thinking, to assess student’s ability to apply the economic way of thinking. In a pilot study involving 120 high school and middle school students across three states, we implement the Test of Economic Thinking to assess the effectiveness of integrating economic concepts into US history courses using the supplemental Economic Episodes in American History textbook. The results indicate that the supplemental textbook improves student’s ability to apply economic concepts. The pilot study suggests that integrating the economic way of thinking into high school US history can be fruitful and that the Economic Episodes in American History text can be a useful tool to facilitate the integration.
Can the economic way of thinking be integrated into high school and middle school US history courses? We introduce an instrument, the Test of Economic Thinking, to assess student’s ability to apply the economic way of thinking. In a pilot study involving 120 high school and middle school students across three states, we implement the Test of Economic Thinking to assess the effectiveness of integrating economic concepts into US history courses using the supplemental Economic Episodes in American History textbook. The results indicate that the supplemental textbook improves student’s ability to apply economic concepts. The pilot study suggests that integrating the economic way of thinking into high school US history can be fruitful and that the Economic Episodes in American History text can be a useful tool to facilitate the integration.
Entry Regulations and Income Inequality at the Regional Level
(with Dustin Chambers)
Journal of Regional Analysis & Policy 49(1): 31-39. 2019
(with Dustin Chambers)
Journal of Regional Analysis & Policy 49(1): 31-39. 2019
Link to: Entry Regulations and Income Inequality at the Regional Level
We combine entry regulation data from the World Bank’s subnational Doing Business Index with regional income inequality from the OECD to test relationship between entry regulation and income inequality at the subnational level. Controlling for other factors known to affect income inequality, we find that a 1 percentage point increase in entry costs (expressed as a percentage of national per capita income) is associated with a 3.4% increase in regional inequality (measured via the 80/20 income percentile ratio). These results suggest that uniform national regulations may have disparate regional effects, as compliance costs may vary by subnational region.
Keywords: income inequality; regulation; entry regulations; Doing Business; regional
JEL Codes: D31, J38, K20
The champions of capitalism? National leaders and the institutional channel
(with Ryan H. Murphy)
Applied Economics Letters (Forthcoming)
(with Ryan H. Murphy)
Applied Economics Letters (Forthcoming)
Easterly and Pennings (2018) study whether economic growth is attributable to national leaders. They find only a select few leaders with growth rates during their tenure that can be statistically distinguished from zero. We compare two sets of leaders – those whose growth rates Easterly and Pennings find to be statistically greater than zero and those they find to be statistically less than zero. We find that leaders who performed better presided over a change in economic freedom roughly a half of a point better than those who performed poorly, suggesting the difference in economic performance may in part have been through the institutional channel. The effect is large, with many specifications corresponding to more than a half of a standard deviation across countries today.
Keywords: Autocracy; Economic freedom; Leaders; Ideology; Institutions
JEL Codes: O43; N40
Keywords: Autocracy; Economic freedom; Leaders; Ideology; Institutions
JEL Codes: O43; N40
Applying Panel Vector Autoregression to Institutions, Human Capital, and Output [SSRN link]
(with Ryan Murphy)
Empirical Economics (Forthcoming)
(with Ryan Murphy)
Empirical Economics (Forthcoming)
Link to: Applying Panel Vector Autoregression to Institutions, Human Capital, and Output [SSRN link]
We bridge two literatures by applying Panel Vector Autoregression (PVAR) to human capital, political institutions, economic institutions, and economic output per capita. Institutions and human capital have competed within the scholarly literature as hypotheses explaining the origins of economic growth. Elsewhere, our measure of economic institutions, the Economic Freedom of the World index, has recently been explored extensively as a dependent variable, whereas previously it had been used as an explanatory variable. We wish to measure the interrelationships between political and economic institutions, as well as their interrelationships with economic output and human capital, in contrast to literature which emphasizes the importance of political institutions alone. We explore these interrelationships in a PVAR model, finding that, descriptively at least, higher quality economic institutions are associated with more output. We also find weak evidence that higher quality political institutions are associated with less output and less education. We also find a robust positive effect of education on the quality of economic institutions. In performing this analysis, we contribute to the literature on the institutions and human capital debate, as well as to the literature on the causes of free economic institutions.
Keywords: Economic Growth, Political Institutions, Economic Institutions, Human Capital
JEL Codes: O43; P51
We bridge two literatures by applying Panel Vector Autoregression (PVAR) to human capital, political institutions, economic institutions, and economic output per capita. Institutions and human capital have competed within the scholarly literature as hypotheses explaining the origins of economic growth. Elsewhere, our measure of economic institutions, the Economic Freedom of the World index, has recently been explored extensively as a dependent variable, whereas previously it had been used as an explanatory variable. We wish to measure the interrelationships between political and economic institutions, as well as their interrelationships with economic output and human capital, in contrast to literature which emphasizes the importance of political institutions alone. We explore these interrelationships in a PVAR model, finding that, descriptively at least, higher quality economic institutions are associated with more output. We also find weak evidence that higher quality political institutions are associated with less output and less education. We also find a robust positive effect of education on the quality of economic institutions. In performing this analysis, we contribute to the literature on the institutions and human capital debate, as well as to the literature on the causes of free economic institutions.
Keywords: Economic Growth, Political Institutions, Economic Institutions, Human Capital
JEL Codes: O43; P51
Banking regulation, regulatory capture and inequality
(with G.P. Manish)
Public Choice 180(1) 145-164. 2019
(with G.P. Manish)
Public Choice 180(1) 145-164. 2019
Link to: Banking regulation, regulatory capture and inequality
Regulation of the banking and finance industry may lead to a more equal distribution of income if regulators pursue goals in the public interest. Alternatively, the economic theory of regulation predicts that regulatory and supervisory processes may be captured by the banking industry, leading to policies that promote the industry’s interests. The liberalization of the banking and finance sector since the 1980s has produced more intense banking supervision and prudential regulation. In this study we find that banking supervision regulation is associated with greater income inequality. These findings are consistent with the economic theory of regulation. We interpret these results as evidence that regulatory capture in the banking and finance industry can have pernicious effects on the distribution of income.
Keywords: Regulation, Inequality, Regressive Effects, Regulatory Capture, Liberalization, Banking Supervision
JEL Codes: D31; D63; D72; D73; L51; F65
And the IMF Said, Let There Be Data, and There Was Data: Private Capital Stocks in the Eastern Bloc
(with Ryan H. Murphy)
Econ Journal Watch, 15(3) 290-300. 2018
(with Ryan H. Murphy)
Econ Journal Watch, 15(3) 290-300. 2018
Link to: And the IMF Said, Let There Be Data, and There Was Data: Private Capital Stocks in the Eastern Bloc
The International Monetary Fund has recently published a dataset on public and private capital stocks for 170 countries from 1960-2015 using the perpetual inventory methodology. Following a reckless assumption, opaquely imposed, the dataset likely overstates levels of private investment as a percentage of total investment in former Eastern bloc countries, and thereby likely overstates their private capital stocks. This comment explores the nature and implications of the assumption, and suggests that, in light of the problem, the scope of the IMF project be significantly diminished to address the issue.
Keywords: National Accounts; Investment and Capital Stock Dataset; Public Capital Stock; Public Investment; International Monetary Fund
JEL Codes: H54; P33; N10
The International Monetary Fund has recently published a dataset on public and private capital stocks for 170 countries from 1960-2015 using the perpetual inventory methodology. Following a reckless assumption, opaquely imposed, the dataset likely overstates levels of private investment as a percentage of total investment in former Eastern bloc countries, and thereby likely overstates their private capital stocks. This comment explores the nature and implications of the assumption, and suggests that, in light of the problem, the scope of the IMF project be significantly diminished to address the issue.
Keywords: National Accounts; Investment and Capital Stock Dataset; Public Capital Stock; Public Investment; International Monetary Fund
JEL Codes: H54; P33; N10
Post-Genocide Justice: The Gacaca Courts
(with Yi Zhang)
Development Policy Review, 36(5) 561-576. 2018
(with Yi Zhang)
Development Policy Review, 36(5) 561-576. 2018
Link to Post-Genocide Justice: The Gacaca Courts
Legal institutions are an important determinant of economic performance, particularly in the post-conflict context. In the aftermath of the Rwandan genocide the crippled judicial system failed to administer justice in a timely manner. A modified version of the traditional Gacaca courts were introduced to hear cases from the backlog of over 100,000 genocide suspects. We find that the Gacaca courts performed well as a justice system given the constraints faced. The Gacaca courts generated valuable information about the genocide suspects and increased access to the justice system. The introduction of the Gacaca courts improved the performance of the formal justice system and facilitated post-conflict economic performance.
Keywords: Law and Economics, Dispute Resolution, Rwanda, Comparative Institutions
JEL Codes: K40, K41, O43
Legal institutions are an important determinant of economic performance, particularly in the post-conflict context. In the aftermath of the Rwandan genocide the crippled judicial system failed to administer justice in a timely manner. A modified version of the traditional Gacaca courts were introduced to hear cases from the backlog of over 100,000 genocide suspects. We find that the Gacaca courts performed well as a justice system given the constraints faced. The Gacaca courts generated valuable information about the genocide suspects and increased access to the justice system. The introduction of the Gacaca courts improved the performance of the formal justice system and facilitated post-conflict economic performance.
Keywords: Law and Economics, Dispute Resolution, Rwanda, Comparative Institutions
JEL Codes: K40, K41, O43
Do Institutions Mitigate the Risk of Natural Resource Conflicts? [SSRN link]
(with Ryan Murphy)
Contemporary Economic Policy, 35(3) 532-541. 2017
(with Ryan Murphy)
Contemporary Economic Policy, 35(3) 532-541. 2017
Link to: Do Institutions Mitigate the Risk of Natural Resource Conflicts? [SSRN link]
The resource curse as manifested by an increased likelihood of conflict over rents can be mitigated by institutions. Lei and Michaels (2014) find that exogenous discoveries of “giant” oil fields increase the likelihood of violent conflict, but they find no evidence that democratic institutions mitigate this risk. We estimate the degree to which institutions mitigate the resource curse by reducing the risk of natural resource conflicts by interacting oil discoveries with measures of economic and political institutions. For conflicts in general we find no evidence that democratic institutions mitigate the risk of natural resource conflicts. However, we find that high quality economic institutions reduce the likelihood of territorial (separatist) conflicts following a natural resource rent windfall. Highly autocratic and highly democratic institutions also reduce the likelihood of territorial conflict after a natural resource rent windfall.
Keywords: Conflict, Civil War, Separatist Conflict, Oil, Resource Curse, Institutions, Rent Seeking, Conflict Resolution
JEL Codes: Q34, O13, P48, D74
The resource curse as manifested by an increased likelihood of conflict over rents can be mitigated by institutions. Lei and Michaels (2014) find that exogenous discoveries of “giant” oil fields increase the likelihood of violent conflict, but they find no evidence that democratic institutions mitigate this risk. We estimate the degree to which institutions mitigate the resource curse by reducing the risk of natural resource conflicts by interacting oil discoveries with measures of economic and political institutions. For conflicts in general we find no evidence that democratic institutions mitigate the risk of natural resource conflicts. However, we find that high quality economic institutions reduce the likelihood of territorial (separatist) conflicts following a natural resource rent windfall. Highly autocratic and highly democratic institutions also reduce the likelihood of territorial conflict after a natural resource rent windfall.
Keywords: Conflict, Civil War, Separatist Conflict, Oil, Resource Curse, Institutions, Rent Seeking, Conflict Resolution
JEL Codes: Q34, O13, P48, D74
Exogenous Resource Shocks and Economic Freedom
(with Ryan Murphy)
Comparative Economic Studies, 59(3): 243-260. 2017
(with Ryan Murphy)
Comparative Economic Studies, 59(3): 243-260. 2017
Link to: Exogenous Resource Shocks and Economic Freedom
There is an extensive literature on the presence of valuable natural resources creating a competition for control of central states and resource rents. This mechanism has been argued to be an important underlying factor preventing certain countries from acquiring good institutions and achieving long run economic growth. In this paper, we use a recent data set on the discovery of large, exogenous oil field discoveries as a means of testing whether the presence of large resource rents maligns the freedom of a country’s economic institutions. We find there to be some evidence of contemporaneous effects of these discoveries on the size of government spending, especially transfer payments and subsidies, but this does not show up in our overall measure of economic institutions. These effects also dissipate with time to statistical and economic insignificance, suggesting the discoveries have short run effects on policy but do not impact the underlying institutions at all. At least for this set of exogenous resource discoveries, there is no resource curse for economic institutions.
Keywords: Resource Curse, Economic Freedom, Economic Institutions
JEL Codes: D72, O13, P10
There is an extensive literature on the presence of valuable natural resources creating a competition for control of central states and resource rents. This mechanism has been argued to be an important underlying factor preventing certain countries from acquiring good institutions and achieving long run economic growth. In this paper, we use a recent data set on the discovery of large, exogenous oil field discoveries as a means of testing whether the presence of large resource rents maligns the freedom of a country’s economic institutions. We find there to be some evidence of contemporaneous effects of these discoveries on the size of government spending, especially transfer payments and subsidies, but this does not show up in our overall measure of economic institutions. These effects also dissipate with time to statistical and economic insignificance, suggesting the discoveries have short run effects on policy but do not impact the underlying institutions at all. At least for this set of exogenous resource discoveries, there is no resource curse for economic institutions.
Keywords: Resource Curse, Economic Freedom, Economic Institutions
JEL Codes: D72, O13, P10
Conflict and Economic Growth: The Case for a Closer Look at Forms of Mobilization
(with Arnab Biswas, James T Bang, Aniruddha Mitra)
Applied Economics Letters Vol. 23(15): 1057-1061. 2016.
(with Arnab Biswas, James T Bang, Aniruddha Mitra)
Applied Economics Letters Vol. 23(15): 1057-1061. 2016.
Link to: Conflict and Economic Growth: The Case for a Closer Look at Forms of Mobilization
This paper explores the idea that the lack of robust evidence on the growth impact of civil war could partially be a consequence of considering civil war as an unified conceptual category, regardless of the ordinate of group identity invoked in mobilizing for war. To do so, we distinguish explicitly between episodes of internal conflict where contestants mobilized along the lines of ethnicity and ones where mobilization occurred along other markers of group identity. Using alternative definitions of civil war and using both Fixed Effects and System-GMM estimators to address the endogeneity of conflict and per capita income, we obtain a robust negative impact of nonethnic civil war on economic growth over the period 1975-2005. By contrast, the impact of ethnic war, while negative, is statistically insignificant in all but two specifications.
Keywords : Growth, civil war, ethnicity, mobilization, system GMM
JEL Codes: O43, D74
This paper explores the idea that the lack of robust evidence on the growth impact of civil war could partially be a consequence of considering civil war as an unified conceptual category, regardless of the ordinate of group identity invoked in mobilizing for war. To do so, we distinguish explicitly between episodes of internal conflict where contestants mobilized along the lines of ethnicity and ones where mobilization occurred along other markers of group identity. Using alternative definitions of civil war and using both Fixed Effects and System-GMM estimators to address the endogeneity of conflict and per capita income, we obtain a robust negative impact of nonethnic civil war on economic growth over the period 1975-2005. By contrast, the impact of ethnic war, while negative, is statistically insignificant in all but two specifications.
Keywords : Growth, civil war, ethnicity, mobilization, system GMM
JEL Codes: O43, D74
Household Recovery from Internal Displacement in Northern Uganda [SSRN link]
World Development. Vol 72: 203-215. 2015.
World Development. Vol 72: 203-215. 2015.
Link to: Household Recovery from Internal Displacement in Northern Uganda [SSRN link]
Northern Uganda experienced violent conflict for over 15 years, resulting in the internal displacement of over 1,800,000 Ugandans. In the five years that followed a cease fire agreement in 2006 nearly all the displaced persons and refugees returned home. The difference in the growth of consumption between returnee households and a comparison group of non-displaced households is estimated using propensity score matching. After an initial shock to consumption and assets upon return, returnee households experience a period of catch-up growth. These results contribute to understanding the dynamics of recovery from displacement and have implications for the policy response during recovery.
Keywords: Civil War, Post-Conflict Recovery, Internal Displacement, Migration, Uganda, Refugees
JEL Classification: O12, O15, O55, E21
Audio Slides
Northern Uganda experienced violent conflict for over 15 years, resulting in the internal displacement of over 1,800,000 Ugandans. In the five years that followed a cease fire agreement in 2006 nearly all the displaced persons and refugees returned home. The difference in the growth of consumption between returnee households and a comparison group of non-displaced households is estimated using propensity score matching. After an initial shock to consumption and assets upon return, returnee households experience a period of catch-up growth. These results contribute to understanding the dynamics of recovery from displacement and have implications for the policy response during recovery.
Keywords: Civil War, Post-Conflict Recovery, Internal Displacement, Migration, Uganda, Refugees
JEL Classification: O12, O15, O55, E21
Audio Slides
War and the Growth of Government [SSRN link]
(with Dr. Benjamin Powell)
European Journal of Political Economy. Vol. 40: 31-41. 2015.
(with Dr. Benjamin Powell)
European Journal of Political Economy. Vol. 40: 31-41. 2015.
Link to: War and the Growth of Government [SSRN link]
Does war cause the growth of government? This paper empirically examines how wars impact the size and scope of government using a panel of all wars from 1965 to 2010. Higgs (1987) gives us reason to believe that wars may permanently increase government size and scope (the ratchet effect) while Olson (1982) describes how wars can dislodge interest groups and allow for market liberalizing reforms. We find that wars permanently expand the scope of government regulation but do not impact government size systematically across the countries we study.
Keywords: War, Economic Freedom, Size of Government, Institutional Change
JEL Classification: H11, H12, N40, P48
Does war cause the growth of government? This paper empirically examines how wars impact the size and scope of government using a panel of all wars from 1965 to 2010. Higgs (1987) gives us reason to believe that wars may permanently increase government size and scope (the ratchet effect) while Olson (1982) describes how wars can dislodge interest groups and allow for market liberalizing reforms. We find that wars permanently expand the scope of government regulation but do not impact government size systematically across the countries we study.
Keywords: War, Economic Freedom, Size of Government, Institutional Change
JEL Classification: H11, H12, N40, P48
Firm Investment Decisions in the Post-Conflict Context
The Economics of Transition. Vol 23 (4): 717-751 2015
The Economics of Transition. Vol 23 (4): 717-751 2015
Link to: Firm Investment Decisions in the Post-Conflict Context
Economic and political transition can occur through peaceful or violent means. Violent transition disrupts the incentive for firms to make productive investments. This paper studies the determinants of profit reinvestment for firms in post-conflict transition economies. Results indicate that while access to finance is an important determinant of reinvestment during transition, it is not as important in the post-conflict context. However, property rights protections, in particular institutions of contract enforcement, are a more important determinant of profit reinvestment for firms operating in the post-conflict environment than for firms in general. This indicates that obstacles to investment are context specific.
Keywords: Post-Civil War Recovery, Civil Conflict, Reinvestment, Property Rights, Judicial Institutions
JEL Classification: P14, P26, P37, O16
Economic and political transition can occur through peaceful or violent means. Violent transition disrupts the incentive for firms to make productive investments. This paper studies the determinants of profit reinvestment for firms in post-conflict transition economies. Results indicate that while access to finance is an important determinant of reinvestment during transition, it is not as important in the post-conflict context. However, property rights protections, in particular institutions of contract enforcement, are a more important determinant of profit reinvestment for firms operating in the post-conflict environment than for firms in general. This indicates that obstacles to investment are context specific.
Keywords: Post-Civil War Recovery, Civil Conflict, Reinvestment, Property Rights, Judicial Institutions
JEL Classification: P14, P26, P37, O16
Institutions and Investment in Post-Civil War Recovery [SSRN link]
Comparative Economic Studies. Vol 56 (1): 1-24. 2014.
Comparative Economic Studies. Vol 56 (1): 1-24. 2014.
Link to: Institutions and Investment in Post-Civil War Recovery [SSRN link]
Theories of post-civil war recovery predict a “peace dividend” via the re-accumulation of capital per worker. I hypothesize that such a recovery will occur only when quality institutions have been established. To test this hypothesis I couple data on civil wars from 1970 to 2000 with the measure of legal structure and protection of private property from the Economic Freedom of the World Index. Results from growth regressions using an interaction between an index of property rights and legal institutions, and investment as a percentage of GDP confirm that weak and uncertain institutions inhibit investment, particularly private investment from being allocated efficiently to contribute to recovery in the post-conflict environment. This paper provides empirical support for a model of conflict recovery via capital accumulation, conditional on legal structure and the protection of property rights.
Keywords: Civil War, post-war recovery, institutions, investment, peace dividend, El Salvador
JEL Classification: 011, 017, 043, 050
Theories of post-civil war recovery predict a “peace dividend” via the re-accumulation of capital per worker. I hypothesize that such a recovery will occur only when quality institutions have been established. To test this hypothesis I couple data on civil wars from 1970 to 2000 with the measure of legal structure and protection of private property from the Economic Freedom of the World Index. Results from growth regressions using an interaction between an index of property rights and legal institutions, and investment as a percentage of GDP confirm that weak and uncertain institutions inhibit investment, particularly private investment from being allocated efficiently to contribute to recovery in the post-conflict environment. This paper provides empirical support for a model of conflict recovery via capital accumulation, conditional on legal structure and the protection of property rights.
Keywords: Civil War, post-war recovery, institutions, investment, peace dividend, El Salvador
JEL Classification: 011, 017, 043, 050
Works in Progress:
Exposure to violent conflict increases prosocial behavior, which is a form of social capital or informal institutions. This article studies whether these changes to informal institutions map into change to formal institutions, and if this mapping is characterized by substitutability or complementarity between institutions. To test this hypothesis, we use the synthetic control method to construct a counterfactual path of formal institutions in Sierra Leone and Burundi during and after violent conflict. Results indicate that violence and the corresponding change to informal institutions leads to a persistent decline in the quality of the formal legal system and protections of private property. We interpret this as evidence of substitutability between informal and formal institutions.
Keywords: Institutional Change, Violent Conflict, Social Capital, Sierra Leone, Burundi.
JEL Codes: D74, O17, P48, P50
Keywords: Institutional Change, Violent Conflict, Social Capital, Sierra Leone, Burundi.
JEL Codes: D74, O17, P48, P50
The association between large natural resource rents and low economic growth (the “resource curse”) is well documented. Cross country studies link resource rents to fewer political rights, increased authoritarian governance, increased corruption, and worse bureaucratic quality, indicating that institutional deterioration is one possible channel through which the presence of natural resources may harm economic growth. However, O’Reilly and Murphy (2017) find no evidence that natural resource rent windfalls are associated with lower quality governing institutions (measured by an economic freedom index) in a panel of countries. We build on that, as well as the literature on the determinants of governing institutions, by examining the same relationship at the state level. We provide the first examination of the relationship between natural resource abundance (specifically, oil abundance) and institutional quality at the state level. Our preliminary results are mixed, but we generally fail to find evidence of an institutional channel for the resource curse at the state level.
Keywords: Natural Resource Curse, Oil, Institutions, Economic Freedom, Rent Seeking
JEL codes: D72, O13, 043, P10, E62
Keywords: Natural Resource Curse, Oil, Institutions, Economic Freedom, Rent Seeking
JEL codes: D72, O13, 043, P10, E62
The adoption of markets over the last forty years has helped raised over billion people out of poverty. But most of the so-called Bottom Billion still living in extreme poverty reside in fragile states with weak formal institutions. The path out of poverty in the absence of a stable institutional framework is not as simple as adopting reforms to liberalize formal institutions. Following the institutional taxonomy in Boettke et al. (2008) this paper evaluates the predictions of New Development Economics. Specifically, the implication that allowing endogenously developed institutions to operate can improve institutional quality in fragile and conflict afflicted countries. Reviews of recent research on informal governance in Afghanistan and Rwanda validate the implications of the model. Customary governance and dispute resolution in Afghanistan and Rwanda improved institutional quality. These cases demonstrate that a path to development for fragile states involves allowing endogenously developed informal institutions to operate.
Keywords: Informal Institutions, Emergent Order, Development, Failed States
JEL Codes: O17, P51, P52
Keywords: Informal Institutions, Emergent Order, Development, Failed States
JEL Codes: O17, P51, P52
Post-Conflict Convergence with Productivity-Augmenting Institutions
(with Micah DelVecchio)
(with Micah DelVecchio)
Post-conflict economies are likely to begin a period of economic growth with a level of capital stock which is below their new long-run steady state (assuming that a period of peace is long-lasting) which would indicate higher levels of marginal productivity and faster rates of growth. It's also possible that the capital stock may fall in the onset of peace as the economy reorganizes and investors withhold nuance until the political climate has established security. This paper sets out to test this relationship through the use of a standard neoclassical convergence model. The model is augmented with political institutions to also test the importance of institutions in the recovery process. A method to compute steady -states using a dynamic panel model is employed to determine where each individual economy is relative to its institution-augmented steady state. Results indicate that the economies do converge to their long run growth paths, but from various directions relative to their steady states.
Keywords: macroeconomic analyses of economic development; institutions and growth; measurement of economic growth; cross-country output convergence; models with panel data; government policy
JEL Codes: O11, O38, O43, O47, C23, G18
Keywords: macroeconomic analyses of economic development; institutions and growth; measurement of economic growth; cross-country output convergence; models with panel data; government policy
JEL Codes: O11, O38, O43, O47, C23, G18
Property Rights, Gender Barriers, and Economic Development
(with Kathleen Sheehan)
(with Kathleen Sheehan)
Financial Regulation and Income Inequality
(with GP Manish)
(with GP Manish)
