Colonialism and Modern Income -- Islands as Natural Experiments

Using a new database of islands throughout the Atlantic, Pacific and Indian Oceans we examine whether colonial origins affect modern economic outcomes. We argue that the nature of discovery and colonization of islands provides random variation in the length and type of colonial experience. We instrument for length of colonization using wind direction and wind speed. Wind patterns which mattered a great deal during the age of sail do not have a direct effect on GDP today, but do affect GDP via their historical impact on colonization. The number of years spent as a European colony is strongly positively related to the island's GDP per capita and negatively related to infant mortality. This basic relationship is also found to hold for a standard dataset of developing countries. We test whether this link is directly related to democratic institutions, trade, and the identity of the colonizing nation. While there is substantial variation in the history of democratic institutions across the islands, such variation does not predict income. Islands with significant export products during the colonial period are wealthier today, but this does not diminish the importance of colonial tenure. The timing of the colonial experience seems to matter. Time spent as a colony after 1700 is more beneficial to modern income than years before 1700, consistent with a change in the nature of colonial relationships over time.

The Marginal Product of Capital

Whether or not the marginal product of capital (MPK) differs across countries is a question that keeps coming up in discussions of comparative economic development and patterns of capital flows. Attempts to provide an empirical answer to this question have so far been mostly indirect and based on heroic assumptions. The first contribution of this paper is to present new estimates of the cross-country dispersion of marginal products. We find that the MPK is much higher on average in poor countries. However, the financial rate of return from investing in physical capital is not much higher in poor countries, so heterogeneity in MPKs is not principally due to financial market frictions. Instead, the main culprit is the relatively high cost of investment goods in developing countries. One implication of our findings is that increased aid flows to developing countries will not significantly increase these countries' incomes.

The Marginal Product of Capital

Whether or not the marginal product of capital (MPK) differs across countries is a question that keeps coming up in discussions of comparative economic development and patterns of capital flows. We use easily accessible macroeconomic data to shed light on this issue, and find that MPKs are remarkably similar across countries. Hence, there is no prima facie support for the view that international credit frictions play a major role in preventing capital flows from rich to poor countries. Lower capital ratios in these countries are instead attributable to lower endowments of complementary factors and lower efficiency, as well as to lower prices of output goods relative to capital. We also show that properly accounting for the share of income accruing to reproducible capital is critical to reach these conclusions. One implication of our findings is that increased aid flows to developing countries will not significantly increase these countries' incomes.investment, capital flows

The Economic Effects of Micronutrient Deficiency: Evidence from Salt Iodization in the United States

Iodine deficiency is the leading cause of preventable mental retardation in the world today. Iodine deficiency was common in the developed world until the introduction of iodized salt in the 1920’s. The incidence of iodine deficiency is connected to low iodine levels in the soil and water. We examine the impact of salt iodization in the US by taking advantage of this natural geographic variation. Areas with high pre-treatment levels of iodine deficiency provide a treatment group which we can compare to a control group of low iodine deficiency areas. In the US, salt was iodized over a very short period of time around 1924. We use previously unused data collected during WWI and WWII to compare outcomes of cohorts born before and after iodization, in localities that were naturally poor and rich in iodine. We find evidence of the beneficial effects of iodization on the cognitive abilities of the cohorts exposed to it

RNA systems for NMR studies in vitro and in vivo

NMR spectroscopy is an excellent tool to study the structure-function relationship of RNA. Such measurements are usually performed in vitro, which requires large amounts of isotope- labeled sample in high purity and can give access to individual atoms, structure of the molecule and conformational dynamics. This is contrasted by measurements in living cells, where researchers struggle with low signal intensity, line-broadening and rapid sample degradation. In this work, we developed sample preparation methods for NMR studies to expand the range of RNA constructs that are accessible for NMR studies in vitro and in cells. Firstly, we improved yield and purity of in vitro transcription of short RNA constructs by transcribing several repeating target sequences from a tandem template, and cleaving them to the target length with RNase H. This abolishes issues with suboptimal initiation sequences and creates higher purity due to the high sequence-specificity of RNase H guided by a chimeric oligo. We demonstrated the high yield and purity of several such RNA molecules and incorporated the protocol into a workflow for studies of conformational dynamics with relaxation dispersion NMR. Secondly, we demonstrated the site-specific incorporation of a 13 C/15 N-labeled adenosine into a 46 nt RNA molecule with the use of purely enzymatic methods. Such site-specific labeling is an effective approach to overcome resonance overlap in larger RNAs, which can preclude further structural and dynamics studies. We showed the facile production of such a sample and reported on a second conformation which would in a uniformly labeled sample be hidden by overlapping resonances. Lastly, we furthered method development for in-cell NMR methods by exploring transfection strategies, cell culture methods and RNA systems. We adapted a protocol for the production of circular RNA at high concentration in HEK293T cells to generate the first in-cell NMR spectra of intracellular expressed RNAs. Furthermore, we produced the same circular RNAs by in vitro transcription and ligation to assess their improved stability against cellular exonucleases. As circular RNA model systems, we used the fluorescent aptamer Broccoli and a small hairpin RNA, called GUG, which proved useful for relaxation dispersion NMR measurement previously. The expression of both circular constructs at was possible at micromolar concentration in HEK283T cells and both constructs could be transcribed and circularized in vitro. In-cell NMR of the expressed circular RNA did however not yield detectable signals, indicating that either the intracellular concentration is too low, or the location of the expressed RNA precludes free tumbling

Implementing exercise result verification for the Virtual Unix Lab

This paper discusses implementation of exercise result verification in the Virtual Unix Lab. In the first step, instructions and checks to verify the results are not coupled, which is changed in the second step. For each step, an overview of the underlying system design is given, followed by implementation details of the system as it was realized. For reference, exercise texts, details of the processor of the resulting domain specific language, check scripts, as well as details of the underlying database structure used in the Virtual Unix Lab are included

Distance, Trade, and Income – The 1967 to 1975 Closing of the Suez Canal as a Natural Experiment

The negative effect of distance on bilateral trade is one of the most robust findings in international trade. However, the underlying causes of this negative relationship are less well understood. This paper exploits a temporary shock to distance, the closing of the Suez canal in 1967 and its reopening in 1975, to examine the effect of distance on trade and the effect of trade on income. Time series variation in sea distance allows for the inclusion of pair effects which account for static differences in tastes and culture between countries. The distance effects estimated in this paper are therefore more clearly about transportation costs in the trade of goods than typical gravity model estimates. Distance is found to have a significant impact on trade with an elasticity that is about half as large as estimates from typical cross sectional estimates. Since the shock to trade is exogenous for most countries, predicted trade volume from the shock can be used to identify the effect of trade on income. Trade is found to have a significant impact on income. The time series dimension allows for country fixed effects which control for all long run income differences. Because identification is through changes in sea distance, the effect is coming entirely through trade in goods and not through alternative channels such as technology transfer, tourism, or foreign direct investment.

The US may show the EU the way forward on fiscal integration

The financial crisis has not affected all of the countries of the EU in the same way. Member states in the EU’s periphery are struggling with unemployment rates of over 25 per cent, while the core nations, such as Germany, have rates around 5 or 6 per cent. Using another currency union, the US, as a comparison, James Feyrer and Bruce Sacerdote argue that one of the EU’s major weaknesses is its lack of a mechanism for large fiscal transfers between states. In the US, Federal spending is progressive, and much more responsive to external shocks, meaning that there is a much larger degree of smoothing between states in terms of GDP and unemployment rates

Global Savings and Global Investment: The Transmission of Identified Fiscal Shocks

This paper examines the effect of exogenous shocks to savings on world capital markets. Exogenous tax increases in the United States (from Romer and Romer 2010) are only partially offset by changes in domestic private savings, and only a small amount is absorbed by increased domestic investment (contra Feldstein and Horioka 1980). Almost half the change in taxes is transmitted abroad through a change in the US current account. Other countries experience decreases in current accounts and increases in investment in response to exogenous US tax increases. We cannot reject symmetric responses across countries with different currency regimes and levels of development. (JEL E21, E22, E23, E62, F32, F42

Did the Stimulus Stimulate? Real Time Estimates of the Effects of the American Recovery and Reinvestment Act

We use state and county level variation to examine the impact of the American Recovery and Reinvestment Act on employment. A cross state analysis suggests that one additional job was created by each $170,000 in stimulus spending. Time series analysis at the state level suggests a smaller response with a per job cost of about$400,000. These results imply Keynesian multipliers between 0.5 and 1.0, somewhat lower than those assumed by the administration. However, the overall results mask considerable variation for different types of spending. Grants to states for education do not appear to have created any additional jobs. Support programs for low income households and infrastructure spending are found to be highly expansionary. Estimates excluding education spending suggest fiscal policy multipliers of about 2.0 with per job cost of under $100,000.