Economics 855 Prof. Alexander Karaivanov
Theories of Economic
Development Spring 2009
http://www.sfu.ca/~akaraiva akaraiva@sfu.ca
Office: WMX 3629
Office Hours: Wed.
SYLLABUS
Organization
The webpage for the course
is:
http://www.sfu.ca/~akaraiva/e855.html
All course materials and
announcements will be posted on the webpage in pdf or
html format.
Grading
This is a seminar style course so active student
participation in class will be encouraged and rewarded. In addition, each of
you will be expected to present material in front of the class on a paper of
your choice from this syllabus. Finally, a term paper will also contribute
towards your grade. An outline of the paper describing a research question and
your suggested methodology and strategy to answer it must be submitted by the
Monday of week 9 of classes. Several sets of practice problems will be assigned
but they will not be graded. The final course grade will be calculated as
follows:
- class participation and paper presentation: 25% of the final
grade;
- final exam: 45% of the final grade;
- term paper: 30% of the final grade;
Text
There is no required text for
the course. Most of the readings will consist of academic articles (both
classic ones and new working papers) and some lecture notes. As an optional
background reading on some of the topics you can use Development Economics
by Debraj Ray, Princeton University Press, 1998
(hereafter DE).
The journal articles and other reading
materials for the course are listed below. You are required to read the starred (*) items on the reading list and
material from them could be included in the exams. The latter also applies for
all material covered in class regardless of its source (articles, class notes,
presentations). The remaining items on the list are suggested readings to help
deepen your understanding of the material or serve you as references in your
choice of term paper topic.
Course Schedule
Each topic tentatively
corresponds to about 1-1.5 weeks of classes but this would probably change as
the course progresses. Note also that items could be added and deleted from the
reading list at any time. I will notify you of all changes. The most recent
version of the syllabus will be always available on the course website.
1. Development, Poverty, and Inequality: Facts and
Measures
*Bourguignon and Morrison
(2002), “Inequality
among World’s Citizens 1820-1992”, American
Economic Review
*Banerjee,
A. and E. Duflo, (2006) “The Economic Lives of
the Poor”, working paper, MIT
Human Development
Report 2007/08
Banerjee, A. and E. Duflo (2007) “What
is Middle Class about the Middle Classes Around the World?”,
working paper, MIT
Ravallion, M. (2001), “Growth, Inequality and
Poverty: Looking Beyond Averages”, World
Development
Parente, S. and
Dollar, D. (2002), “Growth is Good for the
Poor”, World Bank
Chen, S. and M. Ravallion (2000), “How did the World’s
Poor Fare in the 1990s?”, World Bank
Deaton, A. (2003), “Health,
Inequality and Economic Development”, Journal
of Economic Literature
Banerjee, A. and
Anand, S. and P. Segal, (2008) “What
Do We Know about Global Income Inequality?”, J. Econ. Literature
Banerjee, A. and E. Duflo (2004), “Growth Theory Through the Lens of Development Economics”, working
paper, MIT.
Steckel, R. (2008), “Biological
Measures of the Standard of Living”, J.
Econ. Perspectives
2. Inequality and Development: Interconnections.
Poverty Traps.
*Ghatak,
M. and N. Jiang (2002), “A Simple Model of
Inequality, Occupational Choice and Development”, Journal of Development Economics
*Ray, D. (2000) “What’s New in Development
Economics?”, manuscript,
Banerjee, A and
Galor, O. and J. Zeira (1993). “Income
Distribution and Macroeconomics”, Review
of Economic Studies
Banerjee, A. and A. Newman (1993), “Occupational
Choice and the Process of Development”, Journal
of Political Economy
Benabou, R. (1996), “Inequality and Growth”,
NBER Macroeconomics Annual
Mookherjee, D. and D. Ray (2003) “Persistent
Inequality”, Review of Economic
Studies
3. Coordination Failures, Multiple Equilibria and
History Dependence
*Ray, D. (2000) “What’s New in Development
Economics?”, manuscript, NYU (section 3)
*Murphy, K., A. Schleifer and R. Vishny (1989), “Industrialization
and the Big Push”, Journal of
Political Economy
Rosenstein-Rodan, P. (1943), "Problems
of Industrialization of Eastern and South-Eastern Europe", Econ. Journal (the original ‘big push’
paper)
Hoff, K. (2000), "Beyond Rosenstein-Rodan: The Modern Theory of Underdevelopment Traps",
Annual Bank Conference on Development Economics
Easterly, W. (2006), “The Big Push Déjà Vu”, Journal of Economic Literature
Acemoglu, D. and F. Zillibotti (1997), “Was
Prometheus Unbound by Chance? Risk, Diversification and Growth”, Journal of Political Economy
Kremer, M. (1993): "The O-Ring
Theory of Economic Development", Quarterly
Journal of Economics
Adsera, A. and D. Ray (1998), “History and
Coordination Failure”, Journal of
Economic Growth
Nunn,
N. (2008), “The
Importance of History for Economic Development”, working
paper, Harvard.
4. Agricultural
Organization and Productivity in Developing Countries
*Lecture
notes
*Asuncao, J. and M. Ghatak (2003):
“Can Unobserved
Heterogeneity in Farmer Ability Explain the Inverse Relationship between Farm
Size and Productivity?”, Economics Letters
*Lin, J. (1992) "Rural reforms and agricultural growth in China", American
Economic Review
Eswaran, M. and A. Kotwal (1985):
"A Theory of Contractual Structure in Agriculture", American
Economic Review
Banerjee, A., P. Gertler and M. Ghatak (2002), "Empowerment and Efficiency
- Tenancy Reform in West Bengal", Journal of Political Economy.
Shaban, R. (1987): "Testing between alternative models of sharecropping", Journal
of Political Economy
Laffont, J. and M. Matoussi (1995), "Moral
Hazard, Financial Constraints and Sharecropping in El Oulja",
The Review of Economic Studies
Ackerberg, D. and M. Botticini
(2002): "Endogenous
Matching and Empirical Determinants of Contractual Form", Journal
of Political Economy.
Besley, T. and Burgess, R. (2000): "Land
Reform, Poverty and Growth: Evidence from India", Quarterly Journal
of Economics
Baland, J. and J. Robinson (2003) “Land and Power”,
CEPR Discussion Paper
Conning, J. and J.
Robinson (2005) “Property
Rights and the Political Organization of Agriculture”, working paper
5. Credit Markets in
Developing Economies
*Ghosh, P., D. Mookherjee and D.
Ray (2000), “Credit
Rationing in Developing Countries: An Overview of the Theory”, chapter 11
in Readings in the Theory of Economic
Development
*Stiglitz,
J. and A. Weiss (1981), "Credit Rationing in Markets with Incomplete Information,"
American Economic Review 71,
393-410.
Paulson,
A., R. Townsend and A. Karaivanov (2006), “Distinguishing
Limited Liability from Moral Hazard in a Model of Entrepreneurship”, Journal of Political Economy
Besley, T. (1995): "How
do Market Failures Justify Interventions in Rural Credit Markets" World
Bank Research Observer
Besley, T. and A. Levenson (1996), “The
Role of Informal Finance in Household Capital Accumulation: Evidence from
Taiwan”, Economic Journal
Banerjee, A., E. Duflo and K. Munshi (2003), “The (mis)-allocation
of Capital”, European Economic
Review
Banerjee, A. and E. Duflo (2008), “Do Firms Want to Borrow More? Testing
Credit Constraints Using a Directed Lending Program”, working paper, MIT
Townsend,
R. (1995), “Financial
Systems in Northern Thai Villages”, Quarterly
Journal of Economics
Banerjee, A. (2002): "Contracting
Constraints, Credit Markets and Economic Development, MIT Working Paper
No. 02-17
Banerjee, A. (2004), “Inequality and Investment”,
working paper, MIT
Karlan, D. and J. Zinman
(2008): “Observing
Unobservables: Identifying Information Asymmetries
with a Consumer Credit Field Experiment , Working Paper, Yale.
De Mel, S., D. Mckenzie and C. Woodruff
(2008): Returns
to Capital in Microenterprises: Evidence from a field
experiment, forthcoming, Quarterly
Journal of Economics.
6. Insurance Markets in
Developing Economies
*Townsend,
R. (1994), “Risk
and Insurance in Village India”, Econometrica
Ligon, E., Thomas, J. and T. Worrall (2002), "Mutual Insurance and
Limited Commitment: Theory and Evidence in Village Economies'' Review of
Economic Studies 69, 209-244.
Udry, C., (1995) ''Risk
and Savings in Northern Nigeria'', American
Economic Review
Jacoby, H. and
Coate, S. and M. Ravallion
(1993), “Reciprocity
Without Commitment: Characterization and Performance
of Informal Insurance Arrangements'' Journal of Development Economics
40
Townsend, R. (1995) "Consumption
Insurance: An Evaluation of Risk-Bearing Systems in Low-Income Economies",
Journal of Economic Perspectives
Genicot, G. and D. Ray (2005), “Informal Insurance,
Enforcement Constraints, and Group Formation “
Bloch, F., G. Genicot and D. Ray, (2008) “Informal Insurance
in Social Networks”, Journal of
Economic Theory
7. Microfinance
*Ghatak,
M. and T. Guinnane (1999): "The Economics of Lending
with Joint Liability: Theory and Practice" Journal of Development
Economics
Ahlin, C. and R. Townsend (2007): "Using
Repayment Data to Test Across Models of Joint
Liability Lending", Economic
Journal
Karlan, Dean (2005), "Social
Connections and Group Banking", mimeo,
Giné, X. and D. Karlan (2008) "Peer
Monitoring and Enforcement: Long Term Evidence from Microcredit
Lending Groups with and without Group Liability", Mimeo. Yale.
*Morduch,
J. (1999): "The Microfinance Promise" Journal of Economic
Literature, 37(4), 1569-1614.
Morduch, J. (1998): "Does
Microfinance Really Help the Poor? New Evidence from Flagship Programs in
Bangladesh", Working Paper, NYU
Armendariz, B. and J. Morduch (2004): “Microfinance:
Where Do We Stand?”, ch.
5 in Financial Development and Economic Growth: Explaining the Links
Ananth, B., D. Karlan and S. Mullainathan (2007), “Microentrepreneurs
and Their Money: Three Anomalies”
Burgess, R. and R. Pande, (2003), "Do Rural Banks Matter?
Evidence from the Indian Social Banking Experiment", mimeo, LSE.
Banerjee, A. and
Besley, T., S. Coate, and G. Loury (1993): "The Economics of Rotating Savings and Credit Associations",
American Economic Review, 83
8. Political Economy
*Fernandez, R. and D. Rodrik (1991): "Resistance
to Reform: Status Quo Bias in the Presence of Individual-Specific
Uncertainty", American Economic Review
Bourguignon and Verdier
(2000): “Oligarchy,
Democracy, Inequality, and Growth”, Journal
of Development Economics
Alesina, A., and D. Rodrik (1994):
"Distributive
Politics and Economic Growth", Quarterly Journal of Economics.
*Acemoglu, D. and J. Robinson (2000), "Political
Losers As a Barrier to Economic Development"
AEA Papers and Proceedings vol. 90, 126-130.
Acemoglu, D. (2002): Lecture
Notes on Political Economy of Institutions and Development, Mimeo. MIT
(excellent and comprehensive coverage of the literature)
Rubinchik-Pessach, A. and R. Wang (2005), “Does
It Take a Tyrant to Implement a Good Reform?”,
mimeo,
Roland, G. (2002), “The Political Economy of Transition”, Journal of Economic Perspectives 16(1).
Acemoglu, D. (2003): "Why
Not a Political Coase Theorem?", Journal of Comparative Economics, 31, 620-52.
Besley, T. and T. Persson (2008):
“The
Origins of State Capacity: Property Rights, Taxation and Politics”, American
Economic Review, forthcoming.
Caselli, F. and N. Gennaioli
(2008): "Economics
and Politics of Alternative Institutional Reforms", working paper
9. Social Capital
*Knack, S. and P. Keefer,
(1997) “Does
Social Capital have an Economic Payoff? A Cross Country Investigation”, Quarterly Journal of Economics
*Greif,
A. (1994), “Cultural
Beliefs and the Organization of Society: a historical and theoretical
reflection on collectivist and individualist societies”, Journal of Political Economy
Alesina, A. and E. La
Durlauf, S. and M. Fafchamps
(2004), “Social
Capital”, working paper.
Sobel, J. (2002), “Can We Trust Social
Capital?”, Journal
of Economic Literature
Narayan, D. and L. Pritchett (1997): "Cents and Sociability:
Household Income and Social Capital in Rural Tanzania", World Bank
working paper
Kranton, R. (1996), “Reciprocal
Exchange: A Self-Sustaining System”, American
Economic Review
Arnott R. and J.Stiglitz (1991): "Moral
Hazard and Non-market institutions: Dysfunctional Crowding-out or Peer Monitoring?" American Economic Review
Olken, B. (2008) “Do Television and Radio Destroy
Social Capital?”,
Karlan, D. M. Mobius, T. Rosenblat
and A. Szeidl (2008) “Trust and Social Collateral” Quarterly
Journal of Economics, forthcoming.
10.
Policy Issues I – Property Rights, Corruption, Institutions
*Hall, R. and C. Jones
(1999), “Why Do Some Countries
Produce So Much More Output per Worker than Others?",
Quarterly Journal of Economics
*Acemoglu
D., S. Johnson and J. Robinson (2001), “The Colonial Origins of
Comparative Development: An Empirical Investigation”, American Economic Review
Besley, T. and M. Ghatak
(2008): “Property
Rights”, Mimeo, LSE.
Mauro, P., (1995) "Corruption
and Growth", Quarterly Journal
of Economics
Svensson, J. (2005), “Eight
Questions About Corruption”, J. Econ. Perspectives
Khanna, T. and Y. Yafeh (2007), “Business
Groups in Emerging Markets: Paragons or Parasites?”,
JEL 06/2007
Besley, T. (1995): "Property rights and investment incentives: theory and evidence
from Ghana", Journal of Political Economy.
Djankov, S., R. La Porta, F.
Lopez-De-Silanes and A. Shleifer,
(2002), "The Regulation of Entry" Quarterly Journal of
Economics, 117 (1), 1-37.
Rajan, R., (2007), "The Persistence of
Underdevelopment: Institutions, Human Capital, or Constituencies”, working
paper.
Lucas, R. (1990), "Why Doesn't Capital Flow From Poor to Rich Countries?", American Economic
Review 80, 92--96.
North, D. (1991) “Institutions”,
Journal of Economic Perspectives
Sokoloff, K. and
11.
Policy Issues II – Globalization, Trade, and Foreign Aid
*Dollar, D.
(2001), “Globalization,
Inequality and Poverty since 1980”, World Bank
*Burnside, C. and
D. Dollar (2000), “Aid,
Policies and Growth”, World Bank (read with the paper by Easterly below)
*Easterly,
W. (2003), “Can
Foreign Aid Buy Growth?”, Journal of Economic Perspectives (read with above paper by Burnside
and Dollar)
Fischer, S.
(2003), “Globalization
and Its Challenges”, American
Economic Review
Dollar, D. and A.
Kraay (2001), “Trade, Growth and
Poverty”, working paper, World Bank
Basu, K. (2003), “Globalization and
the Politics of International Finance: The Stiglitz
Verdict”, Journal of Economic Literature
Winters, L.,
Easterly, W. and T. Pfutze (2008), “Where
Does the Money Go?”, J. Econ. Perspectives
Chong, A. and M.
Gradstein (2008), What Determines Foreign Aid? The Donors' Perspective , JDE