Adam Przeworski
ap3@is2.nyu.edu
998-3707
Elisabeth Wood
ew2@is.nyu.edu
998-8534
The course is an advanced introduction to the literature, with a heavily methodological bent. It focuses on defining what we do not know and on the methods for finding out.
The first part of the course is an introduction to growth economics. The second part examines the impact of intra-country inequality on growth. The last part focuses on the impact of voter preferences and of government policies.
Class meetings will consist mainly of lectures. There will be a take-home exam, which is enclosed.
Students will be assumed to know some economics (micro with calculus), some game theory (perfect Bayesian equilibrium) and some statistics (OLS). Readings will be extensive and some difficult. The pace will be rapid.
Items under "Read" provide general introductions to particular topics; those under "Study" will be explained in class: these constitute required reading. "Recommended" and "Assumed" are-self-explanatory; "Background" includes some classical articles that you may find useful if you would like to learn more about a particular topic. You may wish to reread the material after it was discussed in class.
A package of articles will be available.
A textbook, Debraj Ray's Development Economics (Princeton University Press 1998), provides good introductions to several topics. You may want to purchase it at the NYU Book Center.
1. Introduction
Conceptual issues: Growth and development. The concept of economic growth. "Mechanics of growth": production function, growth of inputs. Exogenous versus endogenous models. The logic of inference. Predictions of growth models. Macro and micro models. The politics of economic growth.
Read:
Ray, Chapter 3.
Recommended: (These are introductions to different growth models.)
Sen, Amartya. 1970. "Introduction." In Amartya Sen (ed.), Growth Economics. London: Penguin Books.
Ehrlich, Isaac. 1990. "The Problem of Development: Introduction." Journal of Political Economy 98: S1-S12.
Background: (Early growth models.)
Harrod, R.F. (1939). "Dynamic Theory." In Amartya Sen (ed.) 1970. Growth Economics. London: Penguin Books. Pages 43-65.
Pasinetti, Luigi. (1961). "Profit and Growth." In Amartya Sen (ed.) 1970. Growth Economics. London: Penguin Books. Pages 92-113.
Solow, R.M. (1956). "Model of Growth." In Amartya Sen (ed.) 1970. Growth Economics. London: Penguin Books. Pages 161-192.
Background: (Classical articles in development economics.)
Arndt, H. W. 1987. Economic Development. The History of an Idea. Chicago: University of Chicago Press. Chapters 3 and 4.
Rosenstein-Rodan, P.N. 1943. "Problems of Industrialization of Eastern and South-Eastern Europe." Economic Journal 53: 202-211.
W. Arthur Lewis, 1954. "Economic Development with Unlimited Supplies of Labour." The Manchester School 22: 139-167.
Nurkse, Ragnar. 1952. "Some International Aspects of the Problem of International Development." American Economic Review 62: 571-583.
Singer, H.W. 1949. "Economic Progress in Underdeveloped Countries." Social Research 16: 1-11.
Schultz, T.W. 1960. "Capital Formation by Education." Journal of Political Economy 68: 571-583.
Singer, H.W. 1965. "Social Development: Key Growth Sector." International Development Review 7: 3-8.
Seers, Dudley. 1969. "The Meaning of Development." International Development Review 11: 2-6.
2. Dynamic Optimization
Microfoundations of growth. Control and state variables. Optimal growth. Dynamic optimization: first order conditions. Continuous and discrete models. Steady states. Transitional dynamics.
Study:
Chiang, Alpha. 1992. Elements of Dynamics Optimization. New York: McGraw-Hill. Sections 9.3 and 9.4. (If you want to understand the mathematics behind the technique, study Introduction and Sections 2.1, 7.1, 7.2, 7.3, 8.2, and 8.3.)
Background:
Ramsey, F.P. (1928). ""Optimal Growth." In Amartya Sen (ed.) 1970. Growth Economics. London: Penguin Books. Pages 477-495.
3. Engines of Growth
Exogenous growth. Total factor productivity. Endogenous growth. "Engines of growth": alternative explanations of non-decreasing returns. Physical and human capital. Varieties of knowledge and their role in growth. Multiple equilibria: "poverty traps." Empirical consequences of growth models.
Study:
Mankiw, N. G., P. Romer, and D. Weil. 1992. "A Contribution to the Empirics of Economic Growth." Quarterly Journal of Economics 107: 407-438.
Hammond, Peter J., and Andrés Rodriguez-Clare. 1993. "On Endogenizing Long-Run Growth." In Torben M. Andersen and Karl O. Moene (eds.), Endogenous Growth. Oxford: Blackwell. Pages 1-36.
Read:
Ray, Chapter 4.
Crafts, N.F.R. 1997. "Endogenous growth: lessons for and from economic history." In David M. Kreps and Kenneth F. Wallis (eds.), Advances in economics and econometrics: theory and applications. Seventh World Congress. Cambridge: Cambridge University Press. Volume II: pages 38-78.
Recommended:
Jovanovic, Boyan. 1997. "Learning and growth." In David M. Kreps and Kenneth F. Wallis (eds.), Advances in economics and econometrics: theory and applications. Seventh World Congress. Cambridge: Cambridge University Press. Volume II: pages 318-339.
Krugman, Paul. 1992. "Toward a Counter-Counterrevolution in Development Theory." With comments by Joseph Stiglitz and Lal Jayawardena. Proceedings of the World Bank Annual Conference on Development Economics. Washington, D.C.: The World Bank.
Lucas, Robert E. Jr. 1993. "Making a Miracle." Econometrica 61: 251-272.
Lucas, Robert E. Jr. 1988. "On the mechanics of economic development." Journal of Monetary Economics 22: 3-42.
Romer, Paul M. 1990. "Endogenous Technical Change." Journal of Political Economy 98: S71-S102.
Romer, Paul. 1992. "Increasing returns and new developments in the theory of growth." In W.A. Barnett, ed. Equilibrium Theory and Applications. New York: Cambridge University Press. Pages 83-110.
Stiglitz, Joseph E. 1987. "Learning to learn, localized learning and technological progress." In Partha Dasgupta and Paul Stoneman, eds. Economic Policy and Technological Performance. Cambridge: Cambridge University Press. Pages 124-153.
Stiglitz, Joseph E. 1989. "Markets, Market Failures, and Development." American Economic Review. Papers and Proceedings. May: 196-203.
4. Population and Economic Growth
Basic concepts. Background facts. Explanations of fertility: norms and imitation, children as an autonomous value, children as insurance. Supply of and demand for contraception. Population growth and economic growth.
Read:
Ray, Chapter 9.
Dasgupta, Partha. 1995. "The Population Problem: Theory and Evidence." Journal of Economic Literature 33: 1879-1902.
Przeworski, Adam, Michael Alvarez, Jos Antonio Cheibub, and Fernando Limongi. In press. Democracy and Development: Political Regimes and Material Well-being in the World, 1950-1990. New York: Cambridge University Press. Chapter 5.
Recommended:
Livi-Baci, Massimo. 1997. A Concise History of World Population. Second ed. Oxford: Blackwell.
Bardhan, Pranab, and Christopher Udry. 1999. Development Microeconomics. Oxford: Oxford University Press. Chapter 3.
Becker, Gary S., Kevin M. Murphy, and Robert Tamura. 1990. "Human Capital, Fertility, and Economic Growth." Journal of Political Economy 98: S12-S37.
Background:
Becker, Gary S., and Gregg H. Lewis. 1973. "On the Interaction between the Quantity and Quality of Children." Journal of Political Economy 81:279-288.
Cassen, Robert. 1994. "Overview: Population and Development: Old Debates and New Conclusions." In R. A. C. Cassen (ed.). Population and Development: Old Debated, New Conclusions. Washington, DC: Overseas Development Council.
Galor, Oded, and David N. Weil. 1996. "The Gender Gap, Fertility, and Growth." American Economic Review 86: 374-387.
Lloyd, Cynthia B. 1994. "Investing in the Next Generation: The Implications of High Fertility at the Level of the Family." In R. A. C. Cassen (ed.). Population and Development: Old Debated, New Conclusions. Washington, DC: Overseas Development Council.
Pritchett, Lant H. 1994. "Desired Fertility and the Impact of Population Policies." Population and Development Review 20:
Razin, Assaf, and Efraim Sadka. 1995. Population Economics. Cambridge, MA: MIT Press.
Schultz, T. W., ed. 1974. Economics of the Family: Marriage, Childrren and Human Capital. Chicagao: NBER.
Sen, Amartya. 1993. "The Economics of Life and Death." Scientific American, May, 40-47.
5. Empirical Evidence
GNP as the measure of output. International comparisons of GNP. Long-term patterns of development. Do levels of per capita income converge Traps, spurts, and collapses. Do late-comers follow the same path Catch-up. Poverty traps. What do the data tell us about the models Explanations. What accounts for the patterns of growth International inequality. World inequality.
Study:
Quah, Danny T. 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics." The Economic Journal 106: 1045-1055.
Read:
Ray, Chapter 2.
Landes, David S. 1990. "Why are We So Rich and They So Poor American Economic Review 80: 1 - 13.
Collier, Paul, and Jan Willem Gunning. 1999. "Explaining African Economic Performance. Journal of Economic Literature 37: 64-111.
Milanovic, Branko. 1999. "True World Income Distribution, 1988 and 1993: First Calculation Based on Household Surveys Alone." Ms. Washington, D.C.: The World Bank.
Recommended:
Berry, Albert, François Bourguignon, and Christian Morrison. 1991. "Global Economic Inequality and Its Trends Since 1950." In Lars Osberg (ed.). Economic Inequality and Poverty. International Perspectives. Armonk, NY: M.E. Sharpe. Pages 60-91.
Dowrick, Steve, and John Quiggin. 1997. "True Measures of GDP and Convergence." American Economic Review 87: 41-64.
Gerschenkron, Alexander. 1965. Chapter 1 of Economic Backwardness in Historical Perspective. Cambridge: Belknap Press of Harvard. Pages 5-30.
Pritchett, Lant. 1997. "Divergence Big Time. Journal of Economic Perspectives 11: 3-18.
Quah, Danny T. 1993. "Galton's Fallacy and Tests of the Convergence Hypothesis." In Torben M. Andersen and Karl O. Moene (eds.), Endogenous Growth. Oxford: Blackwell. Pages 37-54.
Schultz, T. Paul. 1998. "Inequality in the Distribution of Personal Income in the World: How it is Changing and Why." Journal of Population Economics 11: 307-344.
Verhoogen, Eric. 1998. "Trade Pressures and Wage Convergence." Ms. University of Massachusetts, Amherst and The Brookings Institution.
Zimmerman, L.J.. 1962. "The Distribution of World Income, 1860-1960. In E. De Vries, ed. Essays in Unbalanced Growth: A Century of Disparity and Convergence. S’Gravanhage: Mouton. Pages 28-47.
Background:
Barro, Robert J., and Xavier Sala-i-Martin. 1995. Economic Growth. New York: McGraw-Hill. Pages 26-37 and Chapter 11.
Baumol, William J. 1988. "Productivity Growth, Convergence, and Welfare: Reply." American Economic Review 78: 1155-1159.
De Long, Bradford J. 1988. "Productivity Growth, Convergence, and Welfare: Comment." American Economic Review 78: 1138-1154.
Kuznets, Simon. 1965. Economic Growth and Structure: Selected Essays. New York: W. W. Norton.
Maddison, Angus. 1982. Phases of Capitalist Development. Oxford: Oxford University Press.
6. Path Dependence, Institutional Divergence and Institutional Change
Path dependence. Historical contingency and equilibrium selection. Do initial factor endowments account for institutional divergence Institutions as structures of incentives and as conventions. Evolutionary stability. Illustration: negotiating an end to civil war. Structural bases for compromise. Limitations of stochastic evolutionary theory.
Study:
Young, Peyton. 1995. "The Economics of Conventions." Journal of Economic Perspectives 10: 105-122.
Wood, Elisabeth. 1999. "Civil War Settlement: Modeling the Bases of Compromise. Ms. Department of Politics, New York University.
Read:
Ray, Chapter 5.
North, Douglass C. 1997. "Some Fundamental Puzzles in Economic History/Development. In W. Brian Arthur, Steven N. Durlauf, and David A. Lane (eds.), The Economy as an Evolving Complex System II.. Addison-Wesley.
Engerman, Stanley and Kenneth L. Sokoloff. 1997. "Factor Endowments, Institutions, and Differential Paths of Growth Among New World Economies. In Stephen Haber (ed.), How Latin America Fell Behind: Essays on the Economic Histories of Brazil and Mexico, 1800-1914. Stanford: Stanford University Press. Pages 260 - 304.
Recommended:
Arthur, Brian. 1990. "Positive Feedbacks in the Economy. Scientific American, February: 92-99
Arthur, W. Brian. 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events." Economic Journal 99: 116-131.
Buchanan, James M. 1994. "The Return to Increasing Returns: An Introductory Summary." In James M. Buchanan and Yong J. Yoon (eds.) The Return to Increasing Returns. University of Michigan Press, pp 3-13.
Collier, Paul. 1999. "On the Economic Consequences of Civil War." Oxford Economic Papers 51: 168-83.
Dasgupta, Partha. 1997. "Poverty Traps." In David Kreps and K. Wallis (eds.) Advances in Economic Theory, Volume 2. Cambridge: Cambridge University Press. Pages 114 - 159.
Engerman, Stanley L., Kenneth L. Sokoloff and Elisa V. Mariscal. 1998. Schooling, Suffrage, and the Persistence of Inequality in the Americas, 1800-1945. Ms. University of California, Los Angeles and NBER.
Galor, Oded and Joseph Zeira. 1993. "Income Distribution and Macroeconomics. / Review of Economic Studies 60:35-52.
Gourevitch, Peter. 1986. Politics in Hard Times, Comparative Responses to International Economic Crises, Cornell.
Landes, David S. 1999. The Wealth and Poverty of Nations. New York and London: W. W. Norton.
Young, Peyton. 1998. "Contracts. In Individual Strategy and Social Structure. Princeton. University Press. Pages 131-143.
7. Inequality and Growth
Inequality and long-run growth: Kuznets and Kaldor’s hypotheses. Inequality, redistribution and investment. Political instability and investment. Credit constraint models: growth-promoting redistributive transfers Sustainability issues. Accounting for regional patterns. Data constraints on testing models.
Study:
Bénabou, Roland. 1997. "Inequality and Growth." In Ben Bernanke and Julio Rotemberg (eds.) NBER Macro-Economics Annual. Pages 11-74.
Read:
Ray, Chapters 6 and 7.
Bourguignon, François. 1998. "Distribution, redistribution and development: where do we stand Ms. Delta, Paris.
Recommended:
Aghion, Philippe, Eve Caroli and Cecilia García Peñalosa. N.d. "Inequality and Economic Growth: the Perspective of the New Growth Theories. Journal of Economic Literature (forthcoming).
Alesina, Alberto and Roberto Perotti. 1994. "The Political Economy of Growth: A Critical Survey of the Recent Literature." The World Bank Economic Review 8: 351-371.
Alesina, Alberto, and Roberto Perotti. 1996. "Income Distribution, Political Instability, and Investment." European Economic Review 40: 1203-1228.
Alesina, Alberto, and Roberto Perotti. 1997. "The Politics of Growth: A Survey." In V. Bergström (ed.), Government and Growth. Oxford: Oxford University Press.
Alesina, Alberto and Dani Rodrik. 1994. "Distributive Politics and Economic Growth." Quarterly Journal of Economics 109: 465-490.
Alesina, Alberto, Sule Özler, Nouriel Roubini, and Phillip Swagel. 1996. "Political Instability and Economic Growth." Journal of Economic Growth 1: 189-211.
Atkinson, A.B. 1997. "Bringing Income Distribution in From the Cold. Economic Journal 107: 297-321.
Atkinson, A.B. and F. Bourguignon. 1998. "Introduction. In Anthony Atkinson and François Bourguignon (eds.) Handbook of Income Distribution: Theories and Evidence. North Holland, forthcoming.
Bardhan, Pranab, Samuel Bowles, and Herbert Gintis. 1998. "Wealth Inequality, Credit Constraints, and Economic Performance." In Anthony Atkinson and François Bourguignon (eds.) Handbook of Income Distribution: Theories and Evidence. North Holland, forthcoming.
Deininger, Klaus, and Lyn Squire. 1996. "A New Data Set Measuring Income Inequality." World Bank Economic Review 10: 565-591.
Kanbur, Ravi. 1998. "Income Distribution and Development." Working Paper 98-13 (November). Cornell University Department of Agriculture, Resource, and Managerial Economics. Ithaca, N.Y.
Li, Hongyi, Lyn Squire and Heng-fu Zou. 1997. "Explaining International and Inter-temporal Variations in Income Inequality The Economic Journal 108: 1-18.
Perotti, Roberto. 1996. "Income distribution and investment." European Economic Review 38: 827-835.
Ravallion, Martin. N.d. "On Decomposing Changes in Poverty into ‘Growth and ‘Redistribution Components. Ms. Washington D.C.: World Bank. Forthcoming, Journal of Quantitative Economics.
Background:
Atkinson, Anthony B. 1970. "On the Measurement of Inequality." Journal of Economic Theory 2: 244-263.
Kaldor, Nicholas. 1956. "Alternative Theories of Distribution. Review of Economic Studies 23: 83-100. /
Kaldor, Nicholas. 1957. "A Model of Economic Growth. Economic Journal 67: 591-624.
Kuznets, Simon. 1955. "Economic Growth and Income Inequality." American Economic Review 45: 1-28.
Hicks, Nicolas. 1979. "Growth v. Basic Needs: Is There a Trade-Off " World Development 7: 985-994.
Okun, Arthur. 1975. Equality and Efficiency: The Big Trade‑Off. Washington: Brookings Institution.
8. Redistributive Policy: Success Stories
When can growth-impeding market failures be solved through redistribution Property rights, incentives, residual claimancy, and productivity. Land reform. Tenancy reform. Collective bargaining institutions, wage compression, and redistribution in an open economy. Increased access to social services as redistribution.
Study:
Banerjee, Abhijit, Paul J. Gertler, and Maitreesh Ghatak. 1998. "Empowerment and Efficiency: Economic Analysis of a Tenancy Reform Program in India." Ms.
Karl Ove Moene and Michael Wallerstein. 1995. "How Social Democracy Worked: Labor-Market Institutions. Politics and Society 23: 185-211.
Read:
Ray, Chapters 8 and 12.
Besley, Timothy and Robin Burgess. 1998. "Land Reform, Poverty Reduction and Growth: Evidence from India. London School of Economics. The Suntory Centre: Development Economics Discussion Paper Series, No. 13.
Anand, Sudhir and Martin Ravillion. 1993. "Human Development in Poor Countries: on the Role of Private Incomes and Public Services. Journal of Economic Perspectives 7: 133-150.
Recommended:
Anand, S. and Kanbur, R. 1991. "Public Policy and Basic Needs Provision: Intervention and Achievement in Sri Lanka. In J. Dreze and A. Sen (eds.), The Political Economy of Hunger: Vol III: Endemic Hunger. Oxford: Clarendon Press. Pages 59-91.
Banerjee, Abhijit. 1999. "Land Reforms. Prospects and Strategies. Paper prepared for the Annual World Bank Conference on Development Economics, April 28 to 30, 1999.
Birdsall, Nancy and Juan Luis Londono. 1997. "Asset Inequality Matters: An Assessment of the World Bank’s Approach to Poverty Reduction. American Economic Review 87: pp.32-37.
Bourguignon, François, M. Fournier, and M. Gurgand. 1998. "Distribution, development and education: Taiwan, 1979-1994. Ms.
Laffont, Jean Jacques and Mohamed Salah Matoussi. 1995. "Moral Hazard, Financial Constraints, and Share Cropping in El Oulja. Review of Economic Studies 62: 381-399.
Moene, Karl Ove. 1998. "Feasibility of Social Democracy. Ms. University of Oslo.
Morduch, Jonathan. 1999. "The Grameen Bank: A Financial Reckoning. Ms. Princeton University.
Orme, John. 1995. "Growth with Equity. Megapolicies in Taiwan: Land Reform and Export-Led Growth. In John D. Montgomery and Dennis A. Rondinelli (eds), Great Policies. Strategic Innovations in Asia and the Pacific Basin. Westport and London: Praeger. Pages 41-62.
Ramachandran, V.K. 1996. "On Kerala's Development Achievements." In Jean Dreze and Amartya Sen (eds.), Indian Development: Selected Regional Perspectives. Oxford University Press. Pages 205-356.
Ravallion, Martin and Gaurav Datt. 1999. "When is Growth Pro-Poor Evidence from the Diverse Experiences of India’s States. Ms. Washington D.C.: World Bank.
Sahn, David E. and Neville Edirisinghe. 1993. "The Politics of Food Policy in Sri Lanka: From Basic Human Needs to an Increased Market Orientation. In Per Pinstrup-Andersen (ed.), The Political Economy of Food and Nutrition Policies. Baltimore: Johns Hopkins University Press. Pages 34 - 49.
Sengupta, Sunil and Haris Gazdar. 1996. "Agrarian Politics and Rural Development in West Bengal." In Jean Dreze and Amartya Sen (eds.), Indian Development: Selected Regional Perspectives. Oxford University Press. Pages 129 - 204.
Background:
Stiglitz, J.E. 1974. "Incentives and Risk-sharing in sharecropping. Review of Economic Studies 41: 219-255.
9. Inequality and Growth: Class Conflict Models
Differential games between two actors. Capital-labor game. Dynamic inconsistency. Efficiency enforced by trigger strategies. "Social pacts."
Study:
Przeworski, Adam, and Michael Wallerstein. 1988. "Structural Dependence of the State on Capital." American Political Science Review 82: 11-29.
van der Ploeg, F. 1987. "Trade Unions, Investment, and Employment: A Non‑Cooperative Approach. European Economic Review 31: 1465‑1492.
10. Governments and Economic Growth: Introduction
Good policies and bad policies. What should governments do to promote growth Why would they do what they should
Read:
Robinson, James. 1995. "Theories of 'Bad Policy'." Policy Reform 1: - .
Besley, Timothy, and Stephen Coate. 1998. "Sources of Inefficiency in a Representative Democracy: A Dynamic Analysis." American Economic Review 88: 139-156.
Background: (This is a random selection of views on what governments should and should not do.)
World Bank. Development Report 1987. Chapter 4.
World Bank. Development Report 1991. Chapter 7.
World Bank. Development Report 1997. Entire.
Grossman, Gene M. 1990. "Promoting new industrial activities: a survey of recent arguments and evidence." OECD Economic Studies. 14: 87-126.
Reynolds, Lloyd G. 1983. "The Spread of Economic Growth to the Third World." Journal of Economic Literature 21: 941-980.
Sen, Amartya, Nicholas Stern and Joseph Stiglitz. 1990. "Development Strategies: The Roles of the State and the Private Sector." Proceedings of the World Bank Annual Conference on Development Economics: 421-435.
Krueger, Ann O. 1990. "Government Failures in Development." Journal of Economic Perspectives 4: 9-25.
Westphal, Larry E. 1990. "Industrial Policy in an Export-Propelled Economy: Lessons from South Korea's Experience." Journal of Economic Perspectives 4: 41-60.
Lindauer, David L. and Ann D. Velenchik. 1992. "Government Spending in Developing Countries. Trends, Causes, and Consequences." The World Bank Research Observer 7: 59-78.
11. Vested Interests, Voting Preferences, and Endogenous Policy Determination
Equilibrium growth and inequality with endogenous policies. Determining the decisive voter. Globalization and capital mobility. Technological innovation and vested interests.
Study:
Wood, Elisabeth J. 1999. "Globalization and Endogenous Redistribution. Ms. Department of Politics, New York University.
Krussell, Per, and Jos Victor Ríos-Rull. 1996. "Vested Interests in a Positive Theory of Stagnation and Growth." Review of Economic Studies 63: 301-329.
Read:
Milanovic, Branko. 1999. "Do more unequal countries redistribute more Does the median voter hypothesis hold Ms. Washington, D. C.: The World Bank.
Recommended:
Bénabou, Roland. 1996. "Unequal Societies." NBER Working Paper 5583. NBER. Cambridge, MA.
Bertola, Giuseppe. 1993. "Factor Shares and Savings in Endogenous Growth." American Economic Review 83: 1184-1198.
Lee, Woojin. 1998. "Political Regimes, Income Distribution and Economic Growth." Ms. Department of Economics, University of California, Davis, CA.
Luttmer, Erzo. 1998. "Group Loyalty and the Taste for Redistribution. Ms. University of Chicago Business School.
Moene, Karl Ove and Michael Wallerstein. 1998. "Inequality and Redistribution. University of Oslo, Department of Economics Memorandum No. 25.
Perotti, Roberto. 1993. "Political Equilibrium, Income Distribution, and Growth. Review of Economic Studies 60: 755-776.
Perotti, Roberto. 1996. "Growth, Income Distribution, and Democracy: What the Data Say." Journal of Economic Growth 1: 149-187.
Piketty, T. 1995. "Social Mobility and Redistributive Politics. Quarterly Journal of Economics CS(3): 551-584.
Sinn, Hans-Werner. 1995. "A Theory of the Welfare State. Scandinavian Journal of Economics 95: 495-526.
Sinn, Hans-Werner. 1997. "The selection principle and market failure in systems competition. Journal of Public Economics 66: 247-274.
Background:
Meltzer, Allan H. and Scott F. Richard. 1981. "A Rational Theory of the Size of Government." Journal of Political Economy 89: 914‑927.
12. Government Policies and Economic Growth
Government services as inputs. Optimal size of the government. Production services and consumption services. Taxes and investment.
Study:
Barro, Robert. J. 1990. "Government Spending in a Simple Model of Endogenous Growth." Journal of Political Economy 98: S103-S126.
Read:
Ram, Rati. 1986. "Government Size and Economic Growth: A New Framework and Some Evidence from Cross-Section and Time-Series Data." American Economic Review 76: 191-203.
Cheibub, Jos Antonio, and Adam Przeworski. 1997. "Government spending and economic growth under democracy and dictatorship." In Albert Breton et al. (eds.), Understanding Democracy: Economic and Political Perspectives. Cambridge: Cambridge University Press. Pages 107-124.
Recommended:
Barro, Robert J. and Xavier Sala i Martin. 1990. "Public Finance in Models of Economic Growth." NBER Working Paper #3362.
Carr, Jack L. 1989. "Government Size and Economic Growth: A New Framework and Some Evidence from Cross-Section and Time-Series Data: Comment." American Economic Review 79: 267-271.
Rao, V. V. 1989. "Government and Economic Growth: A New Framework and some evidence from cross-section and time series data. Comment." American Economic Review 79: 281-284.
13. Self-interested governments
Is state autonomy good or bad for economic growth Objectives of rulers. Rent-extraction technologies. Accountability mechanisms. Political regimes. State autonomy under democracy. Political regimes and economic growth.
Read:
Przeworski, Adam. 1999. "Political Institutions and Economic Growth." Ms. Department of Politics, New York University.
Przeworski, Adam, Michael Alvarez, Jos Antonio Cheibub, and Fernando Limongi. In press. Democracy and Development: Political Regimes and Material Well-being in the World, 1950-1990. New York: Cambridge University Press. Introduction, Chapter 3, and Conclusion.
Recommended: (Arguments and models of the impact of "predatory state" on growth).
Clague, Christopher, Philip Keefer, Stephen Knack, and Mancur Olson. 1997. "Institutions and Economic Performance: Property Rights and Contract Enforcement." In C.Clague (ed.), Institutions and Economic Development: Growth and Governance in Less-Developed and Post-Socialist Countries. Baltimore: Johns Hopkins University Press.
Findlay, Ronald. 1990. "The new political economy: Its explanatory power for the LDCs." Economics and Politics 2: 193-221.
Grossman, Herschel I. and Suk Jae Noh. 1990. "A Theory of Kleptocracy with Probabilistic Survival and Reputation." Economics and Politics 2: 157-171.
Lane, Frederic C. 1979. "Economic Consequences of Organized Violence (1958)." In Profits from Power: Readings in Protection Rent and Violence Controlling Enterprises. Albany: State University of New York Press.
McGuire, Martin C., and Mancur Olson. 1996. "The Economics of Autocracy and Majority Rule." Journal of Economic Literature 34: 72-97.
Olson, Mancur. 1991. "Autocracy, Democracy and Prosperity." In Richard J. Zeckhauser (ed.), Strategy and Choice. Cambridge, MA: MIT Press.
Olson, Mancur. 1993. "Dictatorship, Democracy, and Development." American Political Science Review 87: 567-576.
Olson, Mancur. 1997. "The New Institutional Economics: The Collective Choice Approach to Economic Development." In C. Clague (ed.), Institutions and Economic Development: Growth and Governance in Less-Developed and Post-Socialist Countries. Baltimore: Johns Hopkins University Press.
North, Douglass C., and Barry W. Weingast. 1989. "The Evolution of Institutions Governing Public Choice in 17th Century England." Journal of Economic History 49: 803-832.
Wintrobe, Ronald. 1990. "The Tinpot and the Totalitarian: An Economic Theory of Dictatorship." American Political Science Review 84: 849-871.
Background: (This is a debate about "bureaucratic insulation.")
Bardhan, Pranab. 1988. "Comment on Gustav Ranis' and John C. H. Fei's 'Development Economics: What Next '." In Gustav Ranis and T. Paul Schultz, eds. The State of Development Economics. Progress and Perspectives. Oxford: Basil Blackwell. Pages 137-138.
Evans, Peter and Dieter Rueschemeyer. 1985. "The State and Economic Transformation: Toward an Analysis of the Conditions Underlying Effective Intervention." In Peter Evans, Dieter Rueschemeyer, and Theda Skocpol (eds.), Bringing the State Back In. Cambridge: Cambridge University Press.
Haggard, Stephan. 1990. Pathways From Periphery. The Politics of Growth in the Newly Industrializing Countries. Ithaca, NY: Cornell University Press. Pages 42-46.
Przeworski, Adam. 1990. The State and the Economy Under Capitalism. Char: Harwood Academic Publishers. Chapter 2.
14. Overview
What makes countries stagnate and grow Does politics make a difference
Read:
Temple, Jonathan. 1999. The New Growth Evidence. Journal of Economic Literature 37: 112-156.
Take-home examination
Your answers should be no longer than six single-spaced pages in total. Please leave a sufficient left-hand margin for our comments. Do not use a smaller font than 10cpi.
You do not need to cite full references of items on the syllabus (e.g. "Barro 1990: 105" is enough) but do provide full information about other sources.
Answer all three questions:
I. What are the arguments in favor and against the existence of a trade-off between equality and growth In the light of the evidence, what is your view of the issue
II. What is the general structure of the arguments about "poverty traps" Choose one trap to illustrate your answer. Do you think "poverty traps" explain income divergence between countries
III. Discuss one example of governmental intervention that is said to impede growth and one that is said to accelerate growth. What are the arguments and evidence in favor and against each policy having the presumed effect What are the political conditions under which each is likely to occur