This paper studies a simple model of the talent-ownership mismatch-or failure of meritocracy-brought about by credit market imperfections that prevent the transfer of control over productive assets from the untalented rich to the talented poor. We present two main insights. First, there may be...

Does culture have a causal effect on economic development? The data on European regions suggest that it does. Culture is measured by indicators of individual values and beliefs, such as trust and respect for others, and confidence in individual self determination. To isolate the exogenous...

Fiscal policy is procyclical in many developing countries. We explain this policy failure with a political agency problem. Procyclicality is driven by voters who seek to "starve the Leviathan" to reduce political rents. Voters observe the state of the economy but not the rents appropriated by...

How and why does distant political and economic history shape the functioning of current institutions? This paper argues that individual values and convictions about the scope of application of norms of good conduct provide the "missing link." Evidence from a variety of sources points to two...

Is corruption systematically related to electoral rules? Recent theoretical work suggests a positive answer. But little is known about the data. We try to address this lacuna by relating corruption to different features of the electoral system in a sample of about eighty democ-racies in the...