Thesis advisor: Fabio Schiantarelli / Thesis advisor: James Anderson / The thesis is composed of the following three distinct papers. 1.Banks and Development: Jewish Communities in the Italian Renaissance and Current Economic Performance Do banks affect long-term economic performance? I answer this question by relying on an historical development that occurred in Italian cities during the 15th century. A sudden change in the Catholic doctrine had driven the Jews toward money lending. Cities that were hosting Jewish communities developed complex banking institutions for two reasons: first, the Jews were the only people in Italy allowed to lend for a profit; second the Franciscan reaction to Jewish usury led to the creation of charity lending institutions that evolved into many of the current Italian banks. Using Jewish demography in 1450 as an instrument, I estimate large effects of current banking development on the income-per-capita of Italian cities. Additional firm-level analyses suggest that well-functioning local banks exert large effects on aggregate productivity by reallocating resources toward more efficient firms. Controlling for province effects, using additional historical data on Jewish demography and exploiting the expulsion of the Jews from the Spanish territories in Italy in 1541, I argue that my results are not driven by omitted institutional, cultural and geographical characteristics. In particular, I show that the difference in current income between cities that hosted Jewish communities and cities that did not exists only in those regions that were not Spanish territories in the 16th century. These difference-in-difference estimates suggest that the Jewish Diaspora can explain at least 10% of the current income gap between Northern and Southern Italy. 2. Contract Incompleteness, Globalization and Vertical Structure: an Empirical Analysis This paper studies the effects of international openness and contracting institutions on vertical integration. It first derives a number of predictions regarding the interactions between trade barriers, contracting costs, technology intensity, and the extent of vertical integration from a simple model with incomplete contracts. Then it investigates these predictions using a new dataset of over 14000 firms from 45 developing countries. Consistent with theory, the effect of technology intensity of domestic producers on their likelihood to vertically integrate is decreasing in the quality of domestic contracting institutions and in international openness. Contract enforcing costs are particularly high in developing countries and their effects on the vertical structure of technological intensive firms may have significant welfare costs. If improving domestic contracting institutions is not feasible an equivalent solution is to increase openness to international trade. This would discipline domestic suppliers reducing the need for vertical integration. 3. Productivity, Welfare and Reallocation: Theory and Firm-Level Evidence (joint with Susanto Basu, Fabio Schiantarelli and Luis Serven) We prove that in a closed economy without distortionary taxation, the welfare of a representative consumer is summarized to a first order by the current and expected future values of the Solow productivity residual in level and by the initial endowment of capital. The equivalence holds if the representative household maximizes utility while taking prices parametrically. This result justifies TFP as the right summary measure of welfare (even in situations where it does not properly measure technology) and makes it possible to calculate the contributions of disaggregated units (industries or firms) to aggregate welfare using readily available TFP data. We show how these results must be modified if the economy is open or if taxes are distortionary. We then compute firm and industry contributions to welfare for a set of European OECD countries (Belgium, France, Great Britain, Italy, Spain), using industry-level (EU-KLEMS) and firm-level (Amadeus) data. After adding further assumptions about technology and market structure (firms minimize costs and face common factor prices), we show that welfare change can be decomposed into three components that reflect respectively technical change, aggregate distortions and allocative efficiency. Then, using the appropriate firm-level data, we assess the importance of each of these components as sources of welfare improvement in the same set of European countries. / Thesis (PhD) — Boston College, 2010. / Submitted to: Boston College. Graduate School of Arts and Sciences. / Discipline: Economics.

My dissertation studies political economy issues in the development of China. Chapter 1 lies in the intersection of urban economics and political economy. This chapter exploits plausibly exogenous variation generated by a unique national policy in China that requires all residential buildings to receive sufficient hours of sunshine to study a central question in urban economics, namely, whether urban density facilitates the diffusion of information. The policy creates higher degrees of restriction on density at higher latitudes, where longer shadows require buildings to be further apart. Data on individual housing projects across China reveal that the cross-latitude variation in regulatory residential Floor Area Ratio can be described quite well by a formula linking structure density to latitude through the solar elevation angle. These differences in building density further induce differences in population density and land prices across latitudes. Using differential topic dynamics on a national petition platform to measure information diffusion, this chapter shows that people respond to shifts in government attention with varying speeds across latitudes. Increases in local government reply rate to a topic raises the volume of subsequent posts on the same topic, exhibiting an S-shaped time trajectory consistent with local information diffusion about shifting government priorities. These responses are systematically faster in southern cities, where density is higher. Survey evidence further indicates that otherwise similar individuals are more likely to gossip about public issues in a southern city. Chapter 2, coauthored with Junyan Jiang and Tianguang Meng and forthcoming at the journal Governance, examines the flip side of the interaction between local governments and citizens studied in Chapter 1. This chapter studies the response of government policies to opinions expressed online. We address this question by studying the patterns and consequences of online participation at a major electronic petition platform in China. Content analysis of around 900,000 petitions reveals that a substantial share of them concern lower-class issues and are originated from less developed rural and suburban areas. Linking variations in petition volumes to an original dataset of government policy priorities, we further show that online participation led governments to place greater emphasis on social welfare policies and to increase the coverage of a key low-income assistance program. These results underscore the potential of online participation as an important mechanism to improve the quality of governance. Chapter 3, coauthored with Amit Khandelwal, Suresh Naidu and Heiwai Tang, turns to a systematic examination of China's reform process. We apply natural language processing methods to analyze a comprehensive corpus of 1.4 million legal documents issued by the Chinese government at central and local levels since 1949, and measure their market orientation in a data-driven fashion. We document an active introduction of market-oriented legal infrastructure from the mid-1980s to around 2000, which slowed down in the last fifteen years. These dynamics are present within fine-grained policy domains. We find that the market orientation of policies explains just an extra 2% of provincial variation in GDP per capita growth beyond province and time fixed effects. Variable selection based on richer representations of the text exhibits similarly limited predictive power for provincial growth. Taken together, these findings suggest the importance of studying the informal arrangements between market participants and government officials.

The three papers in this dissertation apply quasi-experimental and experimental methods for causal inference to the fields of health and development economics. The first paper exploits a plausibly exogenous reduction in the supply of health care in New York City caused by an historic storm to separately identify the impacts of health care access, weather shocks, and their interaction on chronic conditions. The second paper investigates how formal credit, informal risk sharing, and insurance interact. I exploit a natural experiment wherein tens of thousands of microfinance borrowers across rural Haiti received a quasi-random value of insurance benefit in the aftermath of catastrophic hurricanes. I show that subsequent demand for credit is increasing in the value of insurance, that insurance has decreasing marginal effects on the demand for credit, and that formal insurance increases the fungibility of the informal social ties underpinning risk sharing arrangements. Additionally, I present evidence suggestive of collusion in peer-based claims processing as a function of informal financial proximity. Finally, the third paper reports results from a cluster-randomized trial in rural Haiti that I led. It provides the first causal evidence that delivering basic health goods through microfinance institutions, which offer a platform that reaches 200 million rural poor households globally, is clinically effective.

This dissertation presents results from research on three development economics issues. In Chapter 1, I study the impacts of fuel subsidy reforms on the spatial dispersion of grain prices using a "natural experiment'' from Ethiopia---which removed fuel subsidies in 2008---and a highly disaggregated monthly grain price data from about 300 locations. I find that the removal of fuel subsidy substantially increased grain price dispersion and remote areas are particularly highly affected. Change in grain price dispersion resulting from high transportation cost is a key channel through which the removal of fuel subsidy could influence welfare. Farm households in remote districts have experienced welfare losses due to dampening of grain prices in their areas. In Chapter 2, I present evidence from a randomized control trial on the impact of in-service teacher training and books, both as separate educational inputs and as a package. I test whether there is complementarity between these education inputs. The results suggest that the provision of books, in addition to teacher training, raises student achievement substantially. However, teacher training and books weakly improve test scores when provided individually. The evidence suggests that it is pertinent to supplement teacher training schemes with appropriate teaching materials in resource-poor settings. In Chapter 3, I study the rural non-farm economy (RNFE) in Uganda and Ethiopia to understand the gender gap in access to and return from RNFE using panel household surveys. I find that female-headed households tend to have low access to and return from RNFE.

This dissertation consists of three essays on development and health economics. In the first chapter, I study how abortion responds to drought-induced transitory income shocks and generates unintended demographic consequences under son preference. I focus on rural Vietnam where low rainfall induces a short-run downturn through a reduction in rice yields. With widely available sex-selection technologies at a low cost under son preference, Vietnamese parents can decide the quantity and the sex of child simultaneously, and it can be directly observed from rich household-level data on abortions. Linking rich microdata on fertility with droughts defined at a fine geographic unit, I first find no effects of droughts on the number and the composition of mothers who conceive. I then find compelling evidence that affected mothers were 30% more likely to get abortions, and the effect was mainly driven by the income effect because most abortions occurred in the pre-harvest season of the next rice crop when consumption smoothing is difficult. Surprisingly, droughts are associated with disproportionately more abortions of female fetuses, which exacerbated the problem of the skewed sex ratio: the affected birth cohorts become more male-biased due to the six abortions of female fetuses to one aborted male fetus, explaining up to approximately 3% of the sex ratio imbalance in rural Vietnam from 2004-2013. While a full rebound in births in approximately two years appears more consistent with the effect on the timing of fertility, the effect on the sex ratio at birth emphasizes that even transitory income shocks can have long-run demographic consequences. Thus, this study can shed light on how the gender gap can persist during a process of economic development. This study also enhances our understanding of the mechanism through which credit-constrained mothers adjust their fertility to smooth consumption. Finally, this study can provide timely evidence to developing countries which witness demographic transitions to low infant mortality but are vulnerable to extreme weather events. In the second chapter (joint work with Anna Choi and Semee Yoon), we study how usual economic activities can harm the health of people who are living in other countries. This study investigates the adverse effect of transboundary particulate matter on fetal health. The adverse health effects at exposures to particulate matter are evident by a handful of experimental and epidemiological studies. The health effects of PM2.5, which has a diameter of less than 2.5 micrometers, are particularly alarming because those hazardous particles are so diminutive that they can easily enter the bloodstream to cause cardiovascular and respiratory diseases. Unlike the consensus in the United States on the negative impact of pollution on human health, the evidence for the relationship between pollution and health in developing countries is not straightforward to quantify due to the lack of accurate pollution and welfare measures as well as the difficulty of finding exogenous variables to purge other endogenous factors. However, this study can circumvent these endogeneity concerns by exploiting the unique meteorological settings which can trigger transboundary transport of particulate matter. The westerlies from heavily polluted eastern China carry pollutants to South Korea, thereby intermittently exposing the population to pollution above threshold levels. We find that conditional on local weather and pollution trends, one standard deviation increase in Beijing’s PM2.5 explains 1.1% of standard deviation of daily fetal mortality rates in South Korea. We hope that the results of this research can suggest the first accurate cost estimates of transboundary fine-particle to highlight the urgent need for regional cooperation. In the third chapter, the unintended consequences of economic activities on human capital in developing countries can be further emphasized by a randomized control trial study (joint with Hyuncheol Bryant Kim, Booyuel Kim and Cristian Pop-Eleches). We use a four-year long follow-up of an intervention based on a two-step randomized design within classrooms in secondary schools in Malawi to understand the impact of male circumcision on risky sexual behaviors and the role that peers play in the decision and consequences of being circumcised. Although medical male circumcision can reduce HIV infections, its preventive effects may diminish if circumcised men are more likely to engage in risky sexual behaviors. Despite a number of short-term studies of risk compensation following male circumcision, there is scant rigorous evidence on how these behavioral responses change in the longer term. This study is the first evaluation of risk compensation over such a long follow-up period. Our analysis yields three main results. First, we show that the intervention substantially increased the demand for male circumcision for the students assigned to the treatment group. Second, we find evidence of positive peer effects in the decision to get circumcised among untreated students. Third, we find evidence of risk compensation using biomarkers of sexually transmitted infection for those who got circumcised due to the intervention, but not for those induced by peer effects.

Scotland’s economic capacity to prosper independently of Britain has become a key political issue, dominating the independence referendum of 2014 and continuing to influence British politics since. Often, that debate centres on the contested terms of how we imagine or construct Scotland as an economic entity. Thus, it offers a major opportunity to study the broader issue in critical social science of how economies are “imagined”. However, to date most studies of Scotland’s economy comes from the discipline of economics or from the policy profession. This study aims to address this gap. It highlights the comparatively recent history of professional interest in the Scottish economy; asks what these professionals are “doing” or “constructing”; and looks at how this influences Scotland’s conformity with and deviance from mainstream British politics. Using Jessop’s concept of “economic imaginary”, and drawing on cultural political economy, I thus examine the current Scottish economic debate’s conditions of possibility. These include the emergence of British regional policy, the discovery of North Sea oil, discourses of competitive regions in Europe and the elective affinities between devolution and “enterprise”. I pay particular attention to a general shift in attitudes away from top-down plans to equalise growth across Britain to a focus on the “spirit” of enterprising regions. My research used critical discourse analysis to analyse 100 key documents that played important roles in or highlight key issues in Scottish economic development. I also drew on 23 in-depth semi-structured interviews with professionals and journalists. My original contribution is to examine the path-shaping role of Scotland’s economic imaginary, how choices were made and how alternative paths were closed off. By looking at one contested case, we can gain insights into broader imaginative processes in national and regional economies.

Qiu Hong. / Thesis (M.Phil.)--Chinese University of Hong Kong, 1996. / Includes bibliographical references (leaves 94-99). / List of Tables and Figures --- p.v / List of Symbols and Abbreviations --- p.vi / Chapter Chapter 1 --- Introduction --- p.1 / Chapter Chapter 2 --- Literature Review --- p.5 / Chapter 2.1 --- Theoretical Model --- p.5 / Chapter 2.2 --- Empirical Investigation --- p.6 / Chapter 2.3 --- Empirical Studies on Chinese Economy --- p.9 / Chapter Chapter 3 --- Review of Openness and Pattern of Regional Development in China --- p.11 / Chapter 3.1 --- About the Openness --- p.11 / Chapter 3.2 --- Pattern of Regional Development in The Post-1978 Period --- p.14 / Chapter Chapter 4 --- Data Issues and Methods of Estimation --- p.17 / Chapter 4.1 --- Data Issues --- p.17 / Chapter 4.2 --- Selection of Methods of Estimation --- p.19 / Chapter Chapter 5 --- Neoclassical Growth Accounting : Bench-Mark Model --- p.23 / Chapter 5.1 --- The Bench-Mark Model --- p.23 / Chapter 5.2 --- Results --- p.24 / Chapter Chapter 6 --- The Contribution of Human Capital --- p.32 / Chapter Chapter 7 --- Export and Economic Growth --- p.43 / Chapter 7.1 --- Review of Provincial Export Performance --- p.43 / Chapter 7.2 --- Export Growth : Model and Results --- p.43 / Chapter 7.3 --- Export Share --- p.52 / Chapter 7.4 --- Inter-Sector Spillover : A Feder Type Analysis --- p.57 / Chapter 7.5 --- Understanding Superior Contribution of Exports In NIA and SC : Composition of Export --- p.61 / Chapter Chapter 8 --- Foreign Direct Investment and Economic Growth --- p.64 / Chapter Chapter 9 --- Determinant of Economic Growth : Barro Style Analysis --- p.73 / Chapter 9.1 --- Openness : Exports and FDI --- p.73 / Chapter 9.2 --- Human Capital --- p.74 / Chapter 9.3 --- Interaction of Human Capital and Export --- p.77 / Chapter 9.4 --- Convergence --- p.79 / Chapter 9.5 --- Fisical Policy --- p.82 / Chapter 9.6 --- Reform of Price System --- p.88 / Chapter 9.7 --- Ownership Reform --- p.88 / Chapter Chapter 10 --- Conclusion --- p.91 / Chapter 10.1 --- Summary of Main Findings --- p.91 / Chapter 10.2 --- Suggestion on Further Study --- p.93 / Reference --- p.95

This dissertation contains three essays in Development Economics. The first two chapters relate to the provision of credit for agricultural production in a developing country. The third chapter explores methodological issues in the measurement of risk aversion using laboratory experiments. Risk aversion has been suggested as a theoretical explanation for credit constraints in agricultural settings in developing countries. Better measures of risk aversion can be used to empirically validate these theories. In Chapter 1 of this dissertation, I study the consequences of the use of credit scoring systems for agricultural lending in developing countries. Credit scoring has become a widespread tool to assess the creditworthiness of prospective borrowers, and has been found to increase efficiency and welfare in many settings. This chapter identifies a shortcoming in existing credit scoring systems that may lead to a market failure in agricultural lending in developing countries: Farmers' scores -- and their access to credit -- decline because of exogenous short-term weather shocks that do not reduce their likelihood of future repayment. I use data on the near universe of formal agricultural loans for coffee production in Colombia to show that excess rainfall shocks cause lower concurrent loan repayment, lower credit scores, and more frequent denial of subsequent loan applications. Then, I draw on the agronomic literature on coffee production and use survey data to show that productivity, income and repayment behavior recover faster from these shocks than farmers' credit histories. In the chapter I argue that these additional loan denials create costs for both farmers and the lender that could be avoided. The results presented in this chapter suggest that incorporating verifiable information on individual level shocks into credit scores would increase the efficiency of credit markets. In Chapter 2, together with Jairo Esquivel, Margarita Gáfaro, Guillermo Otero and Moisés Mahecha, I study the determinants of repayment of loans to a public development bank. In particular, we investigate whether the public nature of a lender affects the repayment behavior of its borrowers. We conducted a field experiment where customers who receive reminder phone calls before a payment installment of loans were randomly assigned to different phone call scripts. The loans are from a public agricultural bank in Colombia. In our main treatment, we include a sentence to remind the customer of the public nature of the lender. We find strong and positive effects on repayment performance: farmers in this treatment have probabilities of ever being overdue and of entering into a period of 30 days past due that are respectively 10\% and 22\% lower than those of farmers treated with the traditional script. We interpret this finding as evidence that farmers are more like to repay their loans because of the public nature of the bank. Results from heterogeneity exercises show that some measures of state presence increase the magnitude of the effect of the public treatment, which suggests that state deterrence is a potential mechanism behind our findings. Furthermore, results from treatments where sentiments of altruism and peer pressure are induced by the script suggest that these motives explain part of the effect that the public nature of the lender has on repayment. In Chapter 3, together with Juan Camilo Cárdenas, Christian Jaramillo and Luis Roberto Martínez, I address a methodological concern common in laboratory experiments. The house-money effect, understood as a person's tendency to be more daring with easily-gotten money, is a behavioral pattern that poses questions about the external validity of experiments in economics. We ran an economic experiment with 122 students, who received an amount of money with which they made risky decisions involving losses and gains; a randomly selected treatment group received the money 21 days in advance and a control group got it the day of the experiment. With our preferred specification, we find a mean CRRA risk aversion coefficient of 0.34, with a standard deviation of 0.09. Furthermore, if subjects in the treatment group spent 35\% of the endowment (as they did, on average) their CRRA risk aversion coefficient is higher than that of the control group by approximately 0.3 standard deviations. We interpret this result as evidence of a small and indirect house money effect operating though the amount of the cash in advance that was actually spent. We conclude in this chapter that the house money effect may play a small role in decisions under uncertainty, especially when involving losses.

The issue of the high levels of external debt in the poorest nations has become an increasing matter of concern for the industrialized nations due to the difficulties that heavily indebted nations have with sustaining economic growth. In 2005 the Group of Eight pledged to cancel the debt of the world?s most indebted countries that are eligible for the relief under the Highly Indebted Poor Country (HIPC) initiative. Based on this pledge, the World Bank and the International Monetary Fund approved the debt cancellation in March 2006, with debt cancellation commencing on June 1, 2006. As a reaction, this thesis provides an overview of arguments in favor of debt cancellation as well as against debt cancellation as they are introduced in economic literature. After presenting and taking all the points of view into consideration this thesis comes to the conclusion whether the debt cancellation is a good way to go.

This study attempts to ascertain the importance of foreign capital inflows (FCIs) in Pakistan. We do so by first finding the key determinants of FCIs in Pakistan. Secondly, we attempt to investigate the relationship of FCIs with economic growth and finally we study the impact of FCIs on unemployment, poverty and income inequality. FCIs in this study are combination of foreign direct investment, remittances, foreign aid and external debt. Using data from 1973-2008 for Pakistan we found that growth is key determinant of FCIs both in aggregated and disaggregated forms. Moreover, FCIs have positive impact on economic growth in Pakistan. We also found that FCIs do help in reducing unemployment. Impact on poverty and inequality, however, was found to be insignificant. Results suggest that though FCI is beneficial for growth, the spillovers of the growth are not reaching the poor segment of the society. Policy makers should therefore focus on utilizing these foreign resources, especially remittance inflows, to strengthen domestic financial sector, reduce poverty and inequality. JEL Classification F21, F24, F29 Keywords International Capital Flows, Economic growth, Foreign Direct Investment, Remittances, Foreign Debt, Foriegn Aid, ARDL, Poverty Author's e-mail alionline83@yahoo.com Supervisor's e-mail...