AØKK08356U Seminar: Fundamental Determinants of Economic Performance
The broad question asked is “Why are some societies richer than others?” The proximate answer is that these societies manage higher productivity rates and investment rates in human- and physical capital, but why is it that some societies are so much more productive and invest more than others? The answers can be grouped into three categories: institutions, culture, and geography. The purpose of this seminar is to explore these three “deep determinants of economic growth” empirically. We will be investigating empirically their origins and their consequences.
Examples of topics that are relevant for this seminar are:
The institutions of a country provide the formal rules within which we make decisions, and thus influence economic outcomes in various ways. Which institutions are good for growth and which are bad? And why do some countries develop “bad” institutions, while others end up with “good” institutions?
Our cultural values influence the decisions we make, including our economic decisions. Various economic outcomes have been linked to culture; fertility choices, labor force participation, health, etc. Even GDP per capita has been associated with differences in cultural values, such as individual religiosity, thriftiness, preferences for hard work, patience etc. But how does religiosity or patience influence growth or other economically relevant outcomes such as science development or investments? And why are some societies more religious, thrifty or patient than others?
Peeling off the layers of the onion in our search for the ultimate deep determinants of economic outcomes brings us back into history. Back then, all societies relied on agriculture and, thus, the deep roots of current economic differences is likely to involve differences in agriculture practices. These practices are highly dependent on the geographic and climatic surroundings of historic societies. In fact, certain geographic and climatic circumstances did influence economic outcomes of past societies, and these historic differences explain a major part of current economic differences.
Choice of topic: Choose one of the deep determinants and investigate either its’ origins or its’ consequences for some economically relevant outcome variable. After that, choose whether to replicate an existing paper partly or to conduct your own empirical analysis. Choosing a paper to base your analysis on is always a good place to start. Choose a paper among the A or B journals: http://socialsciences.ku.dk/research/journal_rankings/economics/
Endogeneity problems will play an important role in the empirical work. An example is that when investigating the impact of institutions on GDP per capita, OLS analysis will include two types of endogeneity bias; institutions and GDP per capita may both be influenced by various omitted factors (omitted variables bias), and GDP per capita levels may influence the quality of institutions (reverse causality bias). Students do not have to solve these endogeneity problems perfectly econometrically in order to pass the seminar, but the minimum criterion to pass is proper OLS regression analysis together with a discussion of endogeneity issues.
Students will learn how to conduct proper empirical analysis of macroeconomic questions. In particular, students will learn how to transform a hypothesis into something that we can test empirically and to think about which endogeneity problems that are crucial in the particular analysis.
Students will learn how to write a good paper; set up a hypothesis, motivate why it is relevant, describe how to test it, and last to test it.
You are very welcome to contact me before the semester starts if you want my opinion on a paper that you want to use or a topic that you want to investigate: Jeanet.firstname.lastname@example.org.
The seminar will involve various journal articles and recent working papers. Below are selected overview articles:
Acemoglu, D. (2009) Fundamental Determinants of Differences in Economic Performance, Introduction to Modern Economic Growth Chapter 4, Princeton University Press. Online: http://www.ppge.ufrgs.br/giacomo/arquivos/eco02237/acemoglu-2007.pdf
Guiso, L., P. Sapienza, and L. Zingales, Does Culture Affect Economic Outcomes? Journal of Economic Perspective 20 (2006):23–48.
Nunn, N. (2014) Historical Development, Handbook of Economic Growth Vol 2, Chapter 7, pp. 347-402, doi:10.1016/B978-0-444-53538-2.00007-1.
Some more specific papers for inspiration are:
Comin, D. A., Easterly, W., and E. Gong (2008) Was the Wealth of Nations Determined in 1000 BC? Working Paper 09-052.
Dell, M. (2010) The Persistent Effects of Peru’s Mining MITA, Econometrica 78 (6).
Dell, M., Jones, B. F., and B. A. Olken (2013) What Do We Learn from the Weather? The new Climate-Economy Literature, Journal of Economic Literature.
Hall, R. E. and C. I. Jones (1999) Why Do Some Countries Produce Som Much More Output Per Worker Than Others? The Quarterly Journal of Economics, 114(1).
Michalopoulos, S. and E. Papaioannou (2014) National Institutions and Subnational Development in Africa, The Quarterly Journal of Economics, 151-213.
Nunn, N. and L. Wantchekon (2011) The Slave Trade and the Origins of Mistrust in Africa, American Economic Review, 101, 3221-3252.
Olsson, O. and D. A. Hibbs (2005) Biogeography and long-run economic development, European Economic Review, 49.
Tabellini, G. (2010) Culture and Institutions: Economic Development in the Regions of Europe, Journal of the European Economic Association, 8(4).
Voigtländer, N. and H.-J. Voth (2012) Persecution Perpetuated, Quarterly Journal of Economics, 1339-1392.
Before the session a "so-finalized-as-possible"-draft of the paper must be uploaded in Absalon. After the presentations, the student submit an edited version of the paper in the Digital Exam portal as the final exam paper. The aim is that students use the presentation sessions as an opportunity to receive and use the constructive feedback to improve the paper.
• Planning meeting and teaching: 5 September 2017, 13-15
• Teaching: 12 + 19 September 2017, 13-15
• Deadline commitment paper: not later than 1st of October at 10 AM
• Deadline of pre-paper uploaded to Absalon: Around Nov 15th
• Presentations/Workshops: Around Nov 20th
Throughout the semester there will be supervision meetings with those who find this necessary.
Read about the study programme and curricula at MSc in Economics
- 7,5 ECTS
- Type of assessment
- Written examination- a seminar paper in English that meets the formal requirements for written papers stated in the curriculum and at KUNet for seminars.
- Exam registration requirements
- All aids allowed
- Marking scale
- 7-point grading scale
- Censorship form
- External censorship
- Exam period
Deadline for uploading the seminar paper to DE: 1st of December 2017 before 10:00 AM
Criteria for exam assesment
The student must in a satisfactory way demonstrate that he/she has mastered the learning outcome of the course and the objectives stated in the Curriculum.
- Project work