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The Political Economy of Normal Macroeconomic Pathologies.

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Recognizing that inflation and the macroeconomic policies that affect it can emanate from distributional conflicts in society, we examine the deep determinants of several nominal pathologies and related policy variables from a distributional perspective. We develop new instruments and use well- established existing instruments for these deep determinants and find that two deep determinants—societal divisions and democratic institutions—have a powerful and robust causal impact on nominal macroeconomic outcomes . . . 
Shanker atyanath and Arvind Subramanian

Financial Performance and Outreach: A Global Analysis of Leading Microbanks

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Microfinance promises to reduce poverty by employing profit-making banking practices in low-income communities. Many microfinance institutions have secured high loan repayment rates, but, so far, relatively few earn profits. We examine why this promise remains unmet. We explore patterns of profitability, loan repayment, and cost reduction with unusually high-quality data on 124 institutions in 49 countries. The evidence shows the possibility of earning profits while serving the poor, but a trade-off emerges between profitability and serving the poorest. Raising fees to very high levels does not ensure greater profitability, and the benefits of cost-cutting diminish when serving better-off customers.
Jonathan Morduch, Robert Cull, and Asli Demirgüç-Kunt.

Capital Controls, Political Institutions, and Economic Growth

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The case study literature suggests that liberal international capital flows can have extremely different growth consequences depending on the political environment. Despite this, little systematic attention has been paid to how politics affects the relationship between capital controls and long term growth in a large-n context. Focusing on the conflict alleviating properties of democracy we demonstrate that authoritarian countries with a large number of societal divisions are negatively affected by capital controls, while neither democratic nor homogeneous countries suffer adverse growth effects from capital controls . . . 

White Man's Burden

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The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good. From one of the world’s best-known development economists—an excoriating attack on the tragic hubris of the West’s efforts to improve the lot of the so-called developing world . . . 
William Easterly, NYU

Taking the Measure of Law: The Case of the Doing Business Project

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This article analyzes a number of yearly reports from the World Bank’s Doing Business project, an ambitious international effort to measure various aspects of law and development, analyze their interrelationship, develop benchmarks for assessment of legal systems, and suggest legal reforms. After describing the methodology used, we analyze the strengths and limitations of the project, both as a scholarly enterprise and as a set of proposals for legal reform. Our analysis highlights the challenges associated with measuring legal variables in the face of legal complexity and uncertainty . . . 
Kevin Davis and Michael Kruse

Was the Wealth of Nations Determined in 1000 B.C.?

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We assemble a dataset on technology adoption in 1000 BC, 0 AD, and 1500 AD for the predecessors to today's nation states. We find that this very old history of technology adoption is surprisingly significant for today's national development outcomes. Although our strongest results are for 1500 AD, we find that even technology as old as 1000BC matters in some plausible specifications.
Diego Comin, New York University; William Easterly, New York University; Erick Gong, UC Berkeley

Was Development Assistance a Mistake?

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Development assistance is the combination of money, advice, and conditions provided by rich nations and international financial institutions, such as the World Bank and International Monetary Fund (IMF), which is designed to achieve economic development in poor nations. This article argues that development assistance was based on three assumptions that, with the benefit of hindsight (although a wise few also had foresight), turned out to have been mistaken . . . 
William Easterly