We analyse an economy that lacks a strong legal-political institutional infrastructure and is populated by multiple powerful groups. Powerful groups dynamically interact via a fiscal process that effectively allows open access to the aggregate capital stock. In equilibrium, this leads to slow...

This Paper analyses purchasing power parity (PPP) for the euro area. We study the impact of the introduction of the euro in 1999 on the behaviour of real exchange rates. We test the PPP hypothesis for a panel of real exchange rates within the euro area over the period 1973-2003. Our methodology...

The economic history of Argentina presents one of the most dramatic examples of divergence in the modern era. What happened and why? This paper reviews the wide range of competing explanations in the literature and argues that, setting aside deeper social and political determinants, the various...

The paper combines insights from the recent research programs on constitutions and economic policy, and on history, institutions and growth. Drawing on cross-sectional as well as panel data, it presents new empirical results showing that the form of democracy (rather than democracy vs....

This Paper analyses the welfare benefits from falling relative prices of IT (Information Technology) goods across a wide range of countries. Using two separate methodologies and datasets, we find that welfare benefits mainly accrue to users of IT, not their producers, because of falling relative...

We document an empirical relationship between the cross-country adoption of technologies and the degree of long-term historical relatedness between human populations. Historical relatedness is measured using genetic distance, a measure of the time since two populations’ last common ancestors....

This paper contributes to the literature on the differences in the transmission processes within Euroland. We start from the proposition that there are 'deep' differences in the nature of social conflicts and in the way countries deal with these conflicts. We empirically test this effect for the...

The paper develops the view that the perspective on the HIPC initiative is distorted by the fact that – contrary to the Brady deal itself – it lacks all perspective on the ‘market value’ of the debt which is written down. The appropriate ‘market value’ is one that takes account of...

This paper offers empirical evidence that real exchange rate volatility can have a significant impact on long-term rate of productivity growth, but the effect depends critically on a country's level of financial development. For countries with relatively low levels of financial development,...

Standard macro models cannot explain why real exchange rates are volatile and disconnected from macro aggregates. Recent research argues that models with persistent growth rate shocks and recursive preferences can solve that puzzle. I show that this result is highly sensitive to the structure of...