Trust is an important determinant of economic development. Understanding its origins is therefore critical. We develop a principal-agent model with heterogeneous players to determine the aggregate amount of trustworthiness and trust in a society. People are distributed according to their...

We develop a theory that explains how two core values – Respect for others and Responsibility – affect productivity, the accumulation of capital, and output per worker. Using data from the World Values Survey, we empirically test the model using a panel dataset that includes 82 countries...

Links between social capital, human capital, and product imitation are studied in an overlapping generations model of economic growth with endogenous time allocation. Social capital promotes imitation and there is a two-way interaction between imitation and human capital. Building social capital...

This paper presents a dynamic macroeconomic model that captures key linkages between foreign aid, public investment, growth, and poverty. Public capital is disaggregated into education, core infrastructure, and health. Dutch disease effects associated with aid are accounted for by endogenizing...

This paper studies the impact of aid volatility in a two-period model where production may occur with either a traditional or a modern technology. Public spending is productive and "time to build" requires expenditure in both periods for the modern technology to be used. The possibility of a...