Our Research: Full Index

  Back to Research Home

Think Tanks

This paper is the first to investigate the relationship between think tanks and economic policy empirically. We use panel data for the US states to examine state-based, free market (SBFM) think tanks’ relationship to eight key economic policy objectives. We find little evidence that SBFM think tanks are associated with more “pro-market” policies along the policy dimensions they aim to influence. However, we find stronger evidence that SBFM think tanks are associated with more “pro-market” citizen attitudes about the role of government vs. markets in economic policy. These results suggest that if think tanks’ connection to economic policy is important at all, its importance may be long term and operate via the channel of “ideas" . . . 
Peter T. Leeson, Matt E. Ryan and Claudia R. Williamson

Eroding the Culture of Contracting: Aid, Not Trade?

We analyze how two well-known development policies—international trade and aid—affects the ‘culture of contracting.’ The culture of contracting refers to those cultural characteristics—trust, respect, level of self-determination, and level of obedience—which allow for the impersonal exchange necessary for growth and development. Theoretically, trade and aid may affect the culture of contracting for better or worse. We empirically analyze both possibilities and find that international trade generates, on net, positive effects while foreign aid generates negative effects on the culture of contracting. The more open a country is to trade and the less aid it receives, the more likely it is to possess a stronger culture of contracting.
Christopher J. Coyne and Claudia R. Williamson

Liquidity Traps and Expectation Dynamics: Fiscal Stimulus or Fiscal Austerity?

We examine global dynamics under infinite-horizon learning in New Keynesian models where the interest-rate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja (2008), the intended steady state is locally but not globally stable. Unstable deflationary paths emerge after large pessimistic shocks to expectations. For large expectation shocks that push interest rates to the zero bound, a temporary fiscal stimulus or a policy of fiscal austerity, appropriately tailored in magnitude and duration, will insulate the economy from deflation traps. However "fiscal switching rules" that automatically kick in without discretionary fine tuning can be equally effective.
By Jess Benhabib, George W. Evans, and Seppo Honkapohja

Credit Constraints, Job Mobility and Entrepreneurship: Evidence from a Property Reform in China

This paper provides new evidence on the impact of private property rights and employer-provided housing on entrepreneurship. I find an increase in self-employment following a reform in urban China that allowed state employees who were renting state-owned housing the opportunity to buy their homes at subsidized prices. I develop a model of job choice to test two mechanisms that might explain how the reform increased entrepreneurship. I find evidence that the reform reduced labor mobility costs and alleviated credit constraints by allowing households to capitalize on the value of the real estate.
Shing-Yi Wang

Commercial Imperialism? Political Influence During the Cold War

We provide evidence that increased political influence, arising from CIA interventions during the Cold War, was used to create a larger foreign market for American products. Following CIA interventions, imports from the US increased dramatically, while total exports to the US were unaffected. The surge in imports was concentrated in industries in which the US had a comparative disadvantage, not a comparative advantage. Our analysis is able to rule out decreased trade costs, changing political ideology, and an increase in US loans and grants as alternative explanations . . . 
Daniel Berger, William Easterly, Nathan Nunn, Shanker Satyanath

Indicators as a Technology of Global Governance

The use of indicators is a prominent feature of contemporary global governance. Indicators are used to compare and rank states for purposes as varied as deciding how to allocate foreign aid or investment and determining whether states have complied with their treaty obligations. This article defines the concept of an indicator, analyzes distinctive features of indicators as technologies of governance, and identifies various ways in which the use of indicators has the potential to alter the topology and dynamics of global governance. Particular attention is paid to how indicators can affect processes of standard setting, decisionmaking, and contestation in global governance. The World Bank Doing Business indicators and the United Nations Human Development Index are analyzed as case studies.
Kevin E. Davis, Benedict Kingsbury, Sally Engle Merry

Ethnicity and Conflict: Theory and Facts

Over the second half of the twentieth century, conflicts within national boundaries have become increasingly dominant. One third of all countries have experienced civil conflict. Many (if not most) such conflicts involve violence along ethnic lines. Based on recent theoretical and empirical research, this paper provides evidence that pre-existing ethnic divisions do influence social conflict. The analysis also points to particular channels of influence. Specifically, it is shown that two different measures of ethnic division — polarization and fractionalization — jointly influence conflict, the former more so when the winners enjoy a “public” prize (such as political power or religious hegemony), the latter more so when the prize is “private” (such as looted resources, government subsidies or infrastructures). The available data appear to stand in strong support of existing theories of inter-group conflict. Our argument also provides indirect evidence that ethnic conflicts are likely to be instrumental, rather than driven by primordial hatreds.
Laura Mayoral, Joan Esteban, Debraj Ray

Discovering Law: Hayekian Competition in Medieval Iceland

It is commonplace to assume that legal institutions must be established and enforced by government. The general consensus, even among defenders of free markets, is that some minimal government need exist to provide law. However, between 930 and 1262 the Icelandic Commonwealth (or Free State) functioned in the absence of a coercive state, relying instead on market mechanisms and private institutions. An elaborate legal system developed that guided social interaction and coordinated conflict resolution, without a central government. This article utilizes Hayek’s theory of competition as a discovery process to examine the general social structure and private legal institutions within Medieval Iceland. The goal is to provide an economic theoretical lens to more adequately explain the particular private legal institutions that enabled Iceland to function successfully without a central government for over 300 years.
Carrie B. Kerekes and Claudia R. Williamson

Property Rights and Intra-Household Bargaining

This paper examines whether an individual-level transfer of property rights increases the individual's bargaining power within the household. The question is analyzed in the context of a housing reform that occurred in China that gave existing tenants the opportunity to purchase the homes that they had been renting from their state employers. The rights to each housing unit were granted to a particular employee, so property rights were de ned at the individual level rather than the household level. The results indicate that transferring ownership rights to men increased household consumption of some male-favored goods and women's time spent on chores. Transferring ownership rights to women decreased household consumption of some male-favored goods.
Shing-Yi Wang