We present a model to explain why in the transition economies of Central and Eastern Europe an important output fall has been associated with price liberalization. Its key ingredients are search frictions and Williamsonian relation-specific investment, implying that new investments are made only...

We propose a model of intergenerational transmission of education wherein children belong to either highly educated or low-educated families. Children choose the intensity of their social activities while parents decide how much educational effort to exert. Using data on adolescents in the...

This paper presents a new theory of crime where leaders transmit a crime technology and act as a role model for other criminals. We show that, in equilibrium, an individual's crime effort and criminal decisions depend on the geodesic distance to the leader in his or her network of social...

Civil conflicts spill over into neighboring countries. This paper proposes a theory of the contagion of civil wars. Weak territorial control facilitates the emergence of a regional market for war inputs in the “porous frontier.” The contagion effect is nonlinear and creates multiple...

We build a model of conflict in which two groups contest a resource and must decide on the optimal allocation of labor between fighting and productive activities. In this setting, a diaspora emanating from one of the two groups can get actively involved in the conflict by transferring financial...

In order to elucidate the revival of religion in the Muslim countries, we must not only understand the spread of puritan interpretations of the faith (as they have permeated movements running from Muslim Brothers to violent Islamist movements), but also comprehend the process whereby these more...

We develop a model of the political consequences of public income volatility. As is standard, political incentives create inefficient policies, but we show that making income uncertain creates specific new effects. Future volatility reduces the benefit of being in power, making policy more...

NGO campaigns against firms with value chains involving production in developing and emerging economies are a salient feature of economic globalization. What determines the patterns of the internationalization of NGO campaigns? Stylized facts obtained from recently available data containing 102...

Many developing countries have suffered under the personal rule of kleptocrats', who implement highly inefficient economic policies, expropriate the wealth of their citizens, and use the proceeds for their own glorification or consumption. We argue that the success of kleptocrats rests, in part,...