Differences in worker skill cause modest differences in wages within a country, but are associated with massive differences in productivity across countries (Hanushek and Kimko, 2000). I build upon Kremer’s (1993) O-ring theory of production to explain this stylized fact. I posit that there...

Social science research has shown that intelligence is positively correlated with patience, while growth theory predicts that more patient countries will save more. In a closed economy, that means high average IQ countries will become more capital-intensive. In an open economy, high average IQ...

Social science research has shown that intelligence is positively correlated with patience, while growth theory predicts that more patient countries will save more. In a closed economy, that means high average IQ countries will become more capital-­intensive. In an open economy, high average IQ...

Coordination games have become a critical tool of analysis in fields such as development and institutional economics. Understanding behavior in coordination games is an important step towards understanding the differing success of teams, firms and nations. This paper investigates the...

I show that in a conventional Ramsey model, between one-fourth and one-half of income differences across countries can be explained by a single factor: The steady-state effect of large, persistent differences in national average IQ on worker productivity. These differences in cognitive ability -...

Human capital plays an important role in the theory of economic growth, but it has been difficult to measure this abstract concept. We survey the psychological literature on cross-cultural IQ tests and conclude that modern intelligence tests provide one useful measure of human capital. Using a...

Fiscal rules are controversial. They mitigate politicians' flexibility in responding to shocks and pursuing expansionary fiscal policy. They help, however, to handle politicians' commitment problem in fiscal policies. I portray the new and fast growing empirical literature in public economics...