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Readings

Students are required to read carefully the materials marked with a star (*) prior to the corresponding lecture, usually two papers per topic. Lectures will be based on starred articles in the order listed. Typically, each starred paper corresponds to one lecture.

Part 1: Prof. Kremer

SES # TOPICS READINGS
1 Aggregative growth theory

*Mankiw, N. Gregory, David Romer, and David N. Weil. "A Contribution to the Empirics of Economic Growth." Quarterly Journal of Economics 107, no. 2 (May 1992): pp. 407-437.

Buy at Amazon *Klenow, P., and A. Rodriguez-Clare. "The Neoclassical Revival in Growth Economics: Has it Gone too Far?" NBER Macroeconomics Annual 1997. Vol. 12. Edited by Ben S. Bernanke and Julio J. Rotemberg. Cambridge, MA: MIT Press, 1997, pp. 73-114. ISBN: 9780262522427.

*Kremer, M. "The O-Ring Theory of Economic Development." Quarterly Journal of Economics 108, no. 3 (1993): 551-575.

Romer, Paul. "Increasing Returns and Long-Run Growth." Journal of Political Economy 94, no. 5 (October 1986): 1002-1037.

Lucas, Robert E., Jr. "Why Doesn't Capital Flow from Rich to Poor Countries?" American Economic Review 80, no. 2 (1990): 92-96.

Buy at Amazon Grossman, Gene M., and Elhanan Helpman. Innovation and Growth in the Global Economy. Cambridge, MA: MIT Press, 1991, chapters 1-5. ISBN: 9780262570978.

Aghion, Philippe, and Peter Howitt. "A Model of Growth Through Creative Destruction." Econometrica 60, no. 2 (March 1992): 323-351.

Lucas, Robert E., Jr. "Making a Miracle." Econometrica 61, no. 2 (March 1993): 251-272.

Young, Alwyn. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience." Quarterly Journal of Economics 110, no. 3 (August 1995): 641-680.

Kremer, Michael, and Eric Maskin. "Wage Inequality and Segregation by Skill." Quarterly Journal of Economics, forthcoming. An earlier version is available as National Bureau of Economic Research Working Paper No. 5718, August 1996.

Jones, Charles I. "Intermediate Goods and Weak Links: A Theory of Economic Development" Unpublished manuscript, September 2009. An earlier version is available as National Bureau of Economic Research Working Paper No. 13834, March 2008.
2

Aggregative growth theory (cont.)

Returns to human capital

Returns to human capital

*Bils, Mark, and Peter Klenow. "Does Schooling Cause Growth?" American Economic Review 90, no. 5 (2000): 1160-1183.

*Hanushek, Eri, and Dennis Kimko. "Schooling, Labor-Force Quality, and the Growth of Nations." American Economic Review 90, no. 5 (2000): 1184-1208.

Duflo, Esther. "The Medium Run Consequences of Educational Expansion: Evidence from a Large School Construction Program in Indonesia." Journal of Development Economics 74, no. 1 (2004): 163-197. Earlier versions are available as National Bureau of Economic Research Working Paper No. 8710, January 2002, and Bureau for Research and Economic Analysis of Development (BREAD) Working Paper No. 002, January 2003 (revised). (This resource may not render correctly in a screen reader.PDF)
3 Population

Buy at Amazon *Malthus, Thomas Robert. "An Essay on the Principle of Population." London, United Kingdom: John Murray, 1798, chapters 1 and 2. Reprinted in The Works of Thomas Robert Malthus. Edited by David Souden. London, United Kingdom: Pickering and Chatto Publishers Limited, 1986. ISBN: 9781851960019.

*Kremer, Michael. "Population Growth and Technological Change: 1,000,000 B.C. to 1990." Quarterly Journal of Economics 108, no. 3 (August 1993): 681-716.

Galor, Oded, and David N. Weil. "The Gender Gap, Fertility, and Growth." American Economic Review 86, no. 3 (1996): 374-387.
4 Technology

*Banerjee, Abhijit. "A Simple Model of Herd Behavior." Quarterly Journal of Economics 107, no. 3 (1992): 797-817.

Ellison, Glenn, and Drew Fudenberg. "Rules of Thumb for Social Learning." Journal of Political Economy 101, no. 4 (1993): 612-643.

Foster, Andrew D., and Mark D. Rosenzweig. "Technical Change and Human Capital Returns and Investments: Evidence from the Green Revolution." American Economic Review 86, no. 4 (September 1996): 931-953.

Kremer, Michael, and Christopher Snyder. "Why Are Drugs More Profitable Than Vaccines?" National Bureau of Economic Research Working Paper No. 9833, July 2003.
5 Returns to capital

Caselli, Francesco. "Accounting for Cross-Country Income Differences," Chapter 9 in Handbook of Economic Growth. Vol. 1A. Edited by Philippe Aghion and Steven Durlauf. Amsterdam, The Netherlands: North-Holland, 2005, pp. 679-741. Buy at Amazon ISBN: 9780444520418; Buy at Amazon 9780444508379 (set).

*Udry, Christopher, and Santosh Anagol. "The Return to Capital in Ghana." American Economic Review 96, no. 2 (2006): 388-393.

*Banerjee, Abhijit, and Esther Duflo. "Do Firms Want to Borrow More? Testing Credit Constraints Using a Directed Lending Program." Bureau for Research and Economic Analysis of Development (BREAD) Working Paper No. 005, May 2008 (revised). (This resource may not render correctly in a screen reader.PDF)

*Kremer, Michael, Jean Lee, and Jonathan Robinson. "The Return to Capital for Small Retailers in Kenya: Evidence from Inventories." Working Paper, Harvard University, 2008. (This resource may not render correctly in a screen reader.PDF)

Duflo, Esther, Michael Kremer, and Jonathan Robinson. "How High Are Rates of Return to Fertilizer? Evidence from Field Experiments in Kenya." American Economic Review 98, no. 2 (May 2008): 482-488.

de Mel, Suresh, David McKenzie, and Christopher Woodruff. "Returns to Capital in Microenterprises: Evidence from a Field Experiment." Quarterly Journal of Economics 123, no. 4 (November 2008): 1329-1372.
6 Non-aggregative models of growth

*Banerjee, Abhijit, and Esther Duflo. "Growth Theory through the Lens of Development Economics." Chapter 7 in Handbook of Economic Growth. Vol. 1A. Edited by Philippe Aghion and Steven Durlauf. Amsterdam, The Netherlands: North-Holland, 2005. Buy at Amazon ISBN: 9780444520418; Buy at Amazon 9780444508379 (set).

*Banerjee, Abhijit, and Andrew Newman. "Occupational Choice and the Process of Development." Journal of Political Economy 101, no. 2 (1993): 274-298.

*Hsieh, Chang-Tai, and Peter Klenow. "Misallocation and Manufacturing TFP in China and India." Quarterly Journal of Economics 124, no. 4 (November 2009), forthcoming. Earlier versions are available as mimeograph, Stanford University, 2009, (This resource may not render correctly in a screen reader.PDF) and National Bureau of Economic Research Working Paper No. 13290, August 2007.

Parente, Stephen, and Edward Prescott. "Monopoly Rights: A Barrier to Riches." American Economic Review 89, no. 5 (1999): 1216-1233.

Banerjee, Abhijit, and Sendhil Mullainathan. "Limited Attention and Income Distribution." American Economic Review 98, no. 2 (May 2008): 489-493. Working paper (This resource may not render correctly in a screen reader.PDF)
7 Finance

*La Porta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert W. Vishny. "Law and Finance." Journal of Political Economy 106, no. 6 (December 1998): 1113-1155.

*Khwaja, Asim Ijaz, and Atif Mian. "Tracing the Impact of Bank Liquidity Shocks: Evidence from an Emerging Market." American Economic Review 98, no. 4 (September 2008): 1413-1442. An earlier version is available as National Bureau of Economic Research Working Paper No. 12612, October 2006.

*Khwaja, Asim Ijaz, Atif Mian, and Abid Qamar. "The Value of Business Networks." Weatherhead Center for International Affairs Working Paper, January 2007.

Rajan, Raghuram G., and Luigi Zingales. "Financial Dependence and Growth." American Economic Review 88, no. 3 (June 1998): 559-586.
8 Property rights

*Udry, Christopher, and Goldstein, Markus. "The Profits of Power: Land Rights and Agricultural Investment in Ghana." Journal of Political Economy 116, no. 6 (2008): 981-1022. Working paper (This resource may not render correctly in a screen reader.PDF)

*Kremer, Michael, Edward Miguel, Jessica Leino, and Alix Peterson Zwane. "Spring Cleaning: A Randomized Evaluation of Source Water Quality Improvement." Paper presentation, BREAD/CEPR Conference on Development Economics, London, United Kingdom, October 5-6, 2007. (This resource may not render correctly in a screen reader.PDF)

Besley, Timothy. "Property Rights and Investment Incentives: Theory and Evidence from Ghana." Journal of Political Economy 103, no. 5 (1995): 903-937.

Galiani, Sebastian, Paul Gertler, and Ernesto Schargrodsky. "Water for Life: The Impact of the Privatization of Water Services on Child Mortality in Argentina." Seminar, Center for New Institutional Social Sciences 2003 Speaker Series, Saint Louis, MO, March 14, 2003. (This resource may not render correctly in a screen reader.PDF)

Di Tella, Rafael, Sebastian F. Galiani, and Ernesto S. Schargrodsky. "The Formation of Beliefs: Evidence from the Allocation of Land Titles to Squatters." Quarterly Journal of Economics 122, no. 1 (February 2007): 209-241.

Field, Erica. "Entitled to Work: Urban Property Rights and the Labor Supply in Peru." Quarterly Journal of Economics 122, no. 4 (November 2007): 1561-1602.

Hornbeck, Richard. "Good Fences Make Good Neighbors: Evidence on the Effects of Property Rights." Mimeograph, Department of Economics, Massachusetts Institute of Technology, 2008. (This resource may not render correctly in a screen reader.PDF)
9 Trade

*Nunn, Nathan. "Relationship-Specificity, Incomplete Contracts and the Pattern of Trade." Quarterly Journal of Economics 122, no. 2 (May 2007): 569-600.

*Jensen, Robert. "The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries Sector." Quarterly Journal of Economics 122, no. 3 (August 2007): 879-924.

*Donaldson, Dave. "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure." Mimeograph, London School of Economics, 2008. (This resource may not render correctly in a screen reader.PDF)

Atkin, David. "Trade, Tastes and Nutrition in India." Working paper, Yale University, September 2009. (This resource may not render correctly in a screen reader.PDF - 1.0MB)
10 Reputation

Tirole, Jean. "A Theory of Collective Reputations (With Applications to the Persistence of Corruption and to Firm Quality)." Review of Economic Studies 63, no. 1 (January 1996): 1-22.

*Greif, Avner. "Contract Enforceability and Economic Institutions in Early Trade: The Maghribi Traders' Coalition." American Economic Review 83, no. 3 (June 1993): 525-548.

*Banerjee, Abhijit, and Esther Duflo. "Reputation Effects and the Limits of Contracting: A study of the Indian Software Industry." Quarterly Journal of Economics 115, no. 3 (August 2000): 989-1017.
11

History and culture

Views from political science

History and culture

*Iyer, Lakshmi. "The Long-term Impact of Colonial Rule: Evidence from India." Harvard Business School Working Paper, No. 05041, 2005. (This resource may not render correctly in a screen reader.PDF)

*Fisman, Raymond, and Edward Miguel. "Cultures of Corruption: Evidence from Diplomatic Parking Tickets." National Bureau of Economic Research Working Paper No. 12312, June 2006.

*Clingingsmith, David, Asim Khwaja, and Michael Kremer. "Estimating The Impact of the Hajj: Religion and Tolerance in Islam's Global Gathering." Quarterly Journal of Economics 124, no. 3 (August 2009): 1133-1170.

Glaeser, Edward, and Andrei Shleifer. "Legal Origins." Quarterly Journal of Economics 117, no. 4 (November 2002): 1193-1229.

Guiso, Luigi, Paola Sapienza, and Luigi Zingales. "Does Culture Affect Economic Outcomes?" Journal of Economic Perspectives 20, no. 2 (Spring 2006): 23-48.

Nunn, Nathan. "The Long-Term Effects of Africa's Slave Trades." National Bureau of Economic Research Working Paper No. 13367, September 2007.

Political Science

Buy at Amazon *Huntington, Samuel. "Political Order and Political Decay." Chapter 1 in Political Order in Changing Societies. New Haven, CT: Yale University Press, 1970, pp. 1-92. Reprinted with a Foreword by Francis Fukuyama. New Haven, CT: Yale University Press, 2006. ISBN: 9780300116205. (Page references are to the 1970 edition. ISBN is for the 2006 edition.)

*Bates, Robert. Markets and States in Tropical Africa: The Political Basis of Agricultural Policies. Berkeley, CA: University of California Press, 1981. Buy at Amazon ISBN: 9780520042537. or 2nd ed. Buy at Amazon ISBN: 9780520244931.

Acemoglu, Daron, Simon Johnson, and James A. Robinson. "The Colonial Origins of Comparative Development: An Empirical Investigation." American Economic Review 91, no. 5 (December 2001): 1369-1401. An Earlier version is available as National Bureau of Economic Research Working Paper No. 7771, June 2000.

Kremer, Michael, Sylvie Moulin, and Robert Namunyu. "Decentralization: A Cautionary Tale." Poverty Action Lab Paper No. 10, April 2003. (This resource may not render correctly in a screen reader.PDF)
12 Environment

*Dell, Melissa, Benjamin F. Jones, and Benjamin A. Olken. "Climate Change and Economic Growth: Evidence from the Last Half Century." National Bureau of Economic Research Working Paper No. 14132, June 2008.

Duflo, Esther, and Rohini Pande. "Dams." Quarterly Journal of Economics 122, no. 2 (May 2007): 601-646.

Hornbeck, Richard. "Quantifying Long-term Adjustment to Environmental Change: Evidence from the American Dust Bowl." Mimeograph, Massachusetts Institute of Technology, 2008. (This resource may not render correctly in a screen reader.PDF)

Part 2: Prof. Townsend

SES # TOPICS READINGS
13 Introduction: evaluating the financial systems of emerging market economies

*Townsend, Robert M. "Evaluating the Financial Systems of Emerging Market Economics." Jacob Marschak 2007 Memorial Lecture Presentation, LACEA-LAMES, Bogota, Colombia, October 5, 2007.

Buy at Amazon ———. Financial Systems in Developing Economies: Growth, Inequality and Policy Evaluation in Thailand. New York, NY: Oxford University Press, 2010, forthcoming. ISBN: 9780199533237.
14-15

Conceptual frameworks for measurement

*Pawasutipaisit, Anan, and Robert M. Townsend. "Enterprise and the Creation of Wealth." Unpublished manuscript, Massachusetts Institute of Technology, 2005.

*———. "Wealth Accumulation and Factors Accounting for Success." Working paper, Massachusetts Institute of Technology, 2009. (This resource may not render correctly in a screen reader.PDF)

*Archawa Paweenawat, and Robert M. Townsend. "Villages as Small Open Economies: Trade, Income, and Balance of Payment Accounts." Working paper, Massachusetts Institute of Technology, 2008. (This resource may not render correctly in a screen reader.PDF - 1.9MB)

Buy at Amazon Deaton, Angus. The Analysis of Household Surveys: A Microeconomic Approach to Development Policy. Washington, DC: World Bank Publications, 1997. ISBN: 9780801852541.

Gollin, Douglas. "Getting Income Shares Right." Journal of Political Economy 110, no. 2 (April 2002): 458-474.

Koriyama, Yukio, and Robert M. Townsend. "A Spatial Kuznets Analysis: Dynamic Poverty and Inequality Mapping in Thailand." Unpublished manuscript, Massachusetts Institute of Technology, 2008.

Samphantharak, Krislert, and Robert M. Townsend. "Households as Corporate Firms: Constructing Financial Statements from Integrated Household Surveys." Working paper, University of California, San Diego, 2006. (This resource may not render correctly in a screen reader.PDF)

Antràs, Pol. Lecture notes for Economics 2535: Advanced Topics in International Trade, 2008.

Buy at Amazon Obstfeld, Maurice, and Kenneth S. Rogoff. Foundations of International Macroeconomics. Cambridge, MA: MIT Press, 1996. ISBN: 9780262150477.

Srinivasan, T. N. "India's Statistical System: Critiquing the Report of the National Statistical Commission." In Economic Developments in India: Monthly Update. Vol. 63. Edited by Raj Kapila and Uma Kapila. New Delhi, India: Academic Foundation, 2003, pp. 17-32. ISBN: 9788171883103. [Preview in Google Books]

De Mel, Suresh, Mckenzie, David John, and Woodruff, Christopher M. "Measuring Microenterprise Profits: Don't Ask How the Sausage is Made." World Bank Policy Research Working Paper No. 4229, May 1, 2007. (This resource may not render correctly in a screen reader.PDF)

Buy at Amazon Collins, Daryl, and Jonathan Morduch. "Banking Low Income Populations: Perspectives from South Africa." In Insufficient Funds: Savings, Assets, Credit, and Banking Among Low-Income Households. Edited by Rebecca M. Blank and Michael S. Barr. New York, NY: Russell Sage Foundation Publications, 2009. ISBN: 9780871540782. An earlier version is available here: (This resource may not render correctly in a screen reader.PDF) The presentation slides are available here: (This resource may not render correctly in a screen reader.PDF)
16-17 Testing neo-classical standards

*Felkner, John, Kamilya Tazhibayeva, and Robert M. Townsend. "Efficiency of Rice Production in Thailand: Combining Socio-Economic Data with a Bio-Physical Crop Production model." Working paper, University of Chicago, 2008.

*Chiappori, Pierre-André, Robert M. Townsend, and Hiroyuki Yamada. "Sharing Wage Risk." Working paper, University of Chicago, 2008.

Townsend, Robert M., Samuel Schulhhofer-Wohl, Pierre-André Chiappori, and Krislert Samphantharak. "Tests of Efficient Risk-Sharing and Common Preferences." Working paper, University of Chicago, 2008.(This resource may not render correctly in a screen reader.PDF)

Yamada, Hiroyuki. "Summary of the Labor Data from Townsend Thai Monthly Survey." Working paper, University of Chicago, 2007.
18-19 Interventions

*Townsend, Robert M., and Sergio S. Urzua. "Measuring the Impact of Financial Intermediation: Linking Contract Theory to Econometric Policy Evaluation." Macroeconomic Dynamics 13, Supplement S2 (September 2009): 268-316. Working paper (This resource may not render correctly in a screen reader.PDF)

*Kaboski, Joe, and Robert M. Townsend. "The Impact of Credit: An Early Evaluation of a Large Scale Government Credit Injection." Mimeograph, University of Chicago, 2008.

*———. "Consumption Investment and Savings Under Credit Constraints: Testing Structural Theory Using a Large-Scale Microfinance Experiment." Working paper, Massachusetts Institute of Technology, 2008.

Mauro, Alem, and Robert M. Townsend. "An Evaluation of Safety Nets and Financial Institutions in Crisis and Growth." Working paper, University of Chicago,
2004. (This resource may not render correctly in a screen reader.PDF)

Todd, Petra E., Kenneth I. Wolpin. "Using Experimental Data to Validate a Dynamic Behavioral Model of Child Schooling and Fertility: Assessing the Impact of a School Subsidy Program in Mexico." Working paper, University of Pennsylvania, 2003.

Rosenzweig, Mark R., and Kenneth I. Wolpin (2000) "Natural 'Natural Experiments' in Economics." Journal of Economic Literature 38, no. 4 (December 2000): 827-874.
20 Mechanism design

*Karaivanov, Alexander, and Robert M. Townsend. "Enterprise Dynamics and Finance: Distinguishing Mechanism Design from Exogenously Incomplete Markets Models." Working paper, University of Chicago, 2008. (This resource may not render correctly in a screen reader.PDF)

Paulson, Anna L., Robert M. Townsend, and Alexander Karaivanov. "Distinguishing Limited Liability from Moral Hazard in a Model of Entrepreneurship." Journal of Political Economy 114, no. 1 (February 2006): 100-144.

Karaivanov, Alexander. "Computing Moral Hazard Programs with Lotteries Using MATLAB." Working paper, University of Chicago, 2001.

Townsend, Robert M., and Edward S. Prescott. "Firms as Clubs in Walrasian Markets with Private Information." Journal of Political Economy 114, no. 4 (August 2006): 644-671.

Prescott, Edward S. "Computing Moral Hazard Problems Using the Dantzig-Wolfe Decomposition Algorithm." Federal Reserve Bank of Richmond Working Paper 98-06, June 1998, pp. 1-29. (This resource may not render correctly in a screen reader.PDF - 1.4MB)

———. "A Primer on Moral Hazard Models." Federal Reserve Bank of Richmond Quarterly Review 85, no. 1 (Winter 1999): 47-77. (This resource may not render correctly in a screen reader.PDF)
21-22 Applied general equilibrium development economics

*Townsend, Robert M., and Kenichi Ueda. "Financial Deepening, Inequality, and Growth: A Model-Based Quantitative Evaluation." Review of Economic Studies 73, no. 1 (January 2006): 251-293.

*Jeong, Hyeok, and Robert M. Townsend. "Growth and Inequality: Model Evaluation Based on an Estimation-Calibration Strategy." Macroeconomic Dynamics 12, Supplement S2 (September 2008): 231-284. An earlier version is available as Institute of Economic Policy Research Working Paper 05-10, September 2003. (This resource may not render correctly in a screen reader.PDF)

———. "Sources of TFP Growth: Occupational Choice and Financial Deepening." Institute of Economic Policy Research Working Paper 05-28, May 2005. (This resource may not render correctly in a screen reader.PDF)

Giné, Xavier, and Robert M. Townsend. "Evaluation of Financial Liberalization: A General Equilibrium Model with Constrained Occupation Choice." Journal of Development Economics 74, no. 2 (August 2004): 269-307.

Townsend, Robert M., and Kenichi Ueda. "Welfare Gains from Financial Liberalization." International Monetary Fund Working Papers 07/154,
July 2007. (This resource may not render correctly in a screen reader.PDF)

Felkner, John, and Robert M. Townsend. "The Wealth of Villages: An Application of GIS and Spatial Statistics to Economic Models." Working paper, University of Chicago, 2007.

Buy at Amazon Browning, Martin, Lars Peter Hansen, and James J. Heckman. "Micro Data and General Equilibrium Models." Chapter 8 in Handbook of Macroeconomics. Edited by John B. Taylor and Michael Woodford. Vol. 1B. Amsterdam, The Netherlands: North-Holland, 1999, pp. 543-633. ISBN: 9780444501578.

Moll, Benjamin, Robert M. Townsend, and Victor Zhorin. "Entrepreneurship, Inequality and Growth with Information Constrained Factor Markets." Working paper, Massachusetts Institute of Technology, 2009.

Heckman, James J. "Haavelmo and the Birth of Modern Econometrics: A Review of the History of Econometrics Ideas by Mary Morgan." Journal of Economic Literature 30, no. 2 (June 1992): 876-886.

Heckman, James J., Lance Lochner, and Christopher Taber. "General-Equilibrium Treatment Effects: A Study of Tuition Policy." American Economic Review 88, no. 2 (May 1998): 381-386.

———. "Tax Policy and Human-Capital Formation." American Economic Review 88, no. 2 (May 1998): 293-297.
23 Supply-side

*Assuncao, Juliano, Sergey Mityakov, and Robert M. Townsend. "Commercial vs. Government Development Banks: Spatial Industrial Organization." Working paper, University of Chicago, 2008.

Chan, Tat Y., V. Padmanabhan, and P. B. Seetharaman. "An Econometric Model of Location and Pricing in the Gasoline Market." Working paper, Washington University, St. Louis, 2006. (This resource may not render correctly in a screen reader.PDF)

Holmes, Thomas J. "The Diffusion of Wal-Mart and Economies of Density." National Bureau Economic Research Working Paper No. 13783, February 2008.

Jia, Panle. "What Happens When Wal-Mart Comes to Town: An Empirical Analysis of the Discount Retailing Industry." Econometrica 76, no. 6 (November 2008): 1263-1316.

Schmidt-Dengler, Philipp. "The Timing of New Technology Adoption: The Case of MRI." 2006 Meeting Paper No. 3, Society for Economic Dynamics Annual Meeting, Vancouver, Canada, July 6-8, 2006.