Is there a role for genetics in economic development?

Spolaore and Wacziarg (2009) have presented evidence supporting a role of genetic distance to the United States as a barrier to economic development. We extend their empirical work by controlling for the share of Europeans and European descendants in the population. We find that the role of genetic distance disappears and o¤er two alternative interpretations of the patterns in the data.Genetics; economic development; European settlement.

Democratization as a cost-saving device

We propose a theoretical analysis of democratization processes in which an elite extends the franchise to the poor when threatened with a revo- lution. The poor could govern without changing the political system by maintaining a continuous revolutionary threat on the elite. Revolutionary threats, however, are costly to the poor and democracy is a superior sys- tem in which political agreement is reached through costless voting. This provides a rationale for democratic transitions that has not been discussed in the literature

A proper farewell to Kuznets' hypothesi

The aim of this paper is to o¤er a more appropriate test of Kuznets inverted-Uhypothesis than the one routinely used in the literature and implement it using panel and country-by-country regressions. We explore whether countries experiencing large shifts in population from the agri- cultural/rural sector to the urban one are characterized by an evolution of income inequality along the lines discussed by Simon Kuznets in its classical article. Our results show that there is no systematic relationship between income inequality and agricultural employment or rural population.

Institutions and economic development: panel evidence

In this paper we search for empirical support for the thesis that institutions are a major driver of economic development. While most of the literature uses cross-country regressions (and thus limits itself to the between-country variation in the data), this paper uses pooled OLS, panel regressions with fixed effects, and country by country re- gressions taking advantage of both the within- and between-country variation in the data. Results can be summarized as follows: (a) When using both the within- and between-country variation we find a limited effect of institutions on economic development. The effect disappears once countries leave the lowest level of institutional quality. (b) When using only the within-country variation we find no effect of institutions on economic development.

Colonialism, European descendants and democracy

This paper advances that the share of European descendants in the population is a major determinant of democracy in former colo- nial countries. We test this hypothesis using cross-section and panel regressions with 60 developing and developed countries that were once colonies. We …nd that the share of European descendants can explain more than half of the di¤erence in measures of democracy between the least and the most democratic countries in our sample. We control for other potential determinants of democracy and test for endogeneity bias using instrumental variables.democracy, European descendants, colonialism.

Demographic Transitions: analyzing the effects of mortality on fertility

The effect of mortality reductions on fertility is one of the main mech- anisms stressed by the recent growth literature in order to explain demo- graphic transitions. We analyze the empirical relevance of this mechanism based on the experience of all countries since 1960. We distinguish be- tween the e¤ects on gross and net fertility, take into account the dynamic nature of the relationship and control for alternative explanatory factors and for endogeneity. Our results show that mortality plays a large role in fertility reductions, that the change in fertility behavior comes with a lag of about 10 years and that both net and gross fertility are a¤ected. We find comparatively little support for explanations of the demographic transition based on economic development or technological change.mortality, fertility, demographic transitions, unified growth models.

Adaption and anticipation effects to life events in the United Kingdom

We analyze how individual happiness is affected by nine major life events using a panel of British individuals. Our aim is to test the importance of hedonic adaptation in the United Kingdom and to compare our results with equivalent ones obtained in the literature using German data. We also study anticipation effects for each life event. We find evidence that adaptation, although a common phenomenon, is not always complete and in some cases may not even be present. Compared to German individuals, the British appear to adapt much less to marriage and much more to unemployment.

Mexico’s Free Trade Agreements

[Excerpt] Mexico has had a growing commitment to trade integration through the formation of free trade agreements (FTAs) since the 1990s and its trade policy is among the most open in the world. Mexico\u27s pursuit of FTAs with other countries not only provides economic benefits, but could also potentially reduce its economic dependence on the United States. The United States is, by far, Mexico\u27s most significant trading partner. About 80% of Mexico\u27s exports go to the United States and 49% of Mexico\u27s imports come from the United States. Mexico\u27s second largest trading partner is China, accounting for approximately 6% of Mexico\u27s exports and imports. In an effort to increase trade with other countries, Mexico has a total of 11 trade agreements involving 41 countries. These include agreements with most countries in the Western Hemisphere including the United States and Canada, Chile, Costa Rica, Nicaragua, Guatemala, El Salvador, and Honduras. In addition, Mexico has negotiated FTAs outside of the Western Hemisphere and entered into agreements with Israel and the European Union in July 2000. Mexico also has an FTA with Japan. The large number of trade agreements, however, has not yet been successful in decreasing Mexico\u27s dependence on trade with the United States. Economic motivations are generally the major driving force for the formation of free trade agreements among countries, but there are other reasons countries enter into FTAs, including political and security factors. One of Mexico\u27s primary motivations for the unilateral trade liberalization efforts of the late 1980s and early 1990s was to improve economic conditions in the country, which policymakers hoped would lead to greater investor confidence and attract more foreign investment. Trade agreements were also expected to improve investor confidence, attract foreign investment, and create jobs. Mexico may have other reasons for entering into FTAs, such as expanding market access and decreasing its reliance on the United States as an export market. The slow progress in multilateral negotiations may also contribute to the increasing interest throughout the world in regional trade blocs. Some countries may see smaller trade arrangements as building blocks for multilateral agreements. Since Mexico began trade liberalization in the early 1990s, its trade with the world has risen rapidly, with exports increasing more rapidly than imports. Mexico\u27s trade balance with all countries went from a deficit of $13.5 billion in 1993 to surpluses of$7.1 billion in 1995 and $6.5 billion in 1996. Since 1998, Mexico\u27s trade balance has remained in deficit, reaching$17.5 billion in 2008. The trade balance with the United States went from a deficit of $2.4 billion in 1993 to a surplus of$82.0 billion in 2008. Exports to the United States increased 447% between 1993 and 2008, from $42.9 billion to$292.6 billion. Mexico\u27s imports from the United States increased 237% during the same time period, from $45.3 billion to$152.6 billion. In the 110th Congress, issues of concern related to the trade and economic relationship with Mexico involved mostly economic conditions in Mexico, issues related to the North American Free Trade Agreement (NAFTA), the effect of NAFTA on Mexico, and Mexican migrant workers in the United States. The 111th Congress will likely maintain an active interest concerning Mexico on these issues. This report provides an overview of Mexico\u27s free trade agreements, its motivations for trade liberalization and entering into free trade agreements, and some of the issues Mexico faces in addressing its economic challenges. This report will be updated as events warrant

Monetary Policy and the Stock Market: Some International evidence

This paper presents a model where opening the capital account of an economy causes more bankruptcies to take place in the non tradables sector. Non tradable arms must forecast the future state of the economy when investing since the demand for their goods depends on this. In our model the interest rate is a powerful signal that non tradable arms use when the capital account is closed, but its informational content decreases once the capital account opens up and international (as well as domestic) shocks affect it.