long live the doge death as a term limit on venetian chief executives can an electorate use the projected life expectancy of a lifetime appointed chief executive to enforce binding informal term limits informal term limits based on the life expectancy of a chief executive candidate at election would enable an electorate to exercise discretion in adjusting tenure lengths to minimize expected turnover and tenure length costs while also providing a strictly binding term limit death we provide a detailed historical case study of venice from 1172 to 1797 when the ruling patricians utilized informal term limits on their chief executive the doge relying on the projected life expectancy of ducal candidates

national institutions and subnational development in africa we investigate the role of national institutions on subnational african development in a novel framework that accounts both for local geography and cultural genetic traits we exploit the fact that the political boundaries in the eve of african independence partitioned more than two hundred ethnic groups across adjacent countries subjecting similar cultures residing in homogeneous geographic areas to different formal institutions using both a matching type and a spatial regression discontinuity approach we show that differences in countrywide institutional structures across the national border do not explain within ethnicity differences in economic performance as captured by satellite images of light density the average non effect of national institutions on ethnic development masks considerable heterogeneity partially driven by the diminishing role of national institutions in areas further from the capital cities

uncertainty and incentives in crisis bargaining game free analysis of international conflict we study two different varieties of uncertainty that countries can face in international crises and establish general results about the relationship between these sources of uncertainty and the possibility of peaceful resolution of conflict among our results we show that under some weak conditions there is no equilibrium of any crisis bargaining game that has voluntary agreements and zero probability of costly war we also show that while uncertainty about the other side s cost of war may be relatively benign in peace negotiations uncertainty about the other side s strength in war makes it much more difficult to guarantee peaceful outcomes along the way we are able to assess the degree to which particular modeling assumptions found in the existing literature drive the well known relationship between uncertainty the incentive to misrepresent and costly war we find that while the theoretical connection between war and uncertainty is quite robust to relaxing many modeling assumptions whether uncertainty is about costs or the probability of victory remains important

witchcraft weather and economic growth in renaissance europe between the thirteenth and nineteenth centuries as many as one million individuals in europe were executed for the crime of witchcraft the majority of the trials and executions took place during the sixteenth and seventeenth centuries during this period the speed and volume of executions were astonishing in one german town as many as 400 people were killed in a single day midelfort 1972 the trials were ubiquitous conducted by both ecclesiastical and secular courts by both catholics and protestants the victims were primarily women primarily poor and disproportionately widows the persecutions took place throughout europe starting and ending earlier in southwest europe than in the northern and eastern areas and spread even across the atlantic ocean to salem massachusetts although witchcraft trials in europe and america largely ended by the late eighteenth century witchcraft accusations and killings still take place in many countries today particularly in the developing world for example witchcraft is often blamed for aids deaths in sub saharan africa ashforth 2001 and miguel 2003 shows that negative economic shocks are associated with increases in witch killing in modern tanzania belief in the witch and fear of her is enduring while much work has been done on the motivations behind the european trials the large scale causes remain unknown the existing work has primarily been concerned with the factors that played into trials on a small scale why a certain individual was targeted or why a certain type of individual was targeted in a given area this work has indicated that there was a diverse set of issues that played into trials on an individual level more broadly however there are few causal explanations for why witchcraft trials happened at all and on such a large scale in so many

legal standards enforcement and corruption stricter laws require more incisive and costlier enforcement because enforcement activity depends both on available tax revenue and the honesty of officials the optimal legal standard of a benevolent government is increasing in per capita income and decreasing in officials corruption in contrast to the tollbooth view of regulation the standard chosen by a self interested government is a non monotonic function of officials corruption and can be either lower or higher than that chosen by a benevolent regulator international evidence on environmental regulation shows that standards correlate positively with per capita income and negatively with corruption consistent with the model s predictions for benevolent governments jel d73 k42 l51

economic growth in a cross section of cities abstract we examine the relationship between urban characteristics in 1960 and urban growth between 1960 and 1990 income and population growth move together and both types of growth are 1 positively related to initial schooling 2 negatively related to initial unemployment and 3 negatively related to the initial share of employment in manufacturing racial composition and segregation are uncorrelated with urban growth across all cities but in cities with large nonwhite communities segregation is positively correlated with population growth government expenditures except for sanitation are uncorrelated with growth government debt is positively correlated with later growth

from rent seeking to human capital a model where resource shocks cause transitions from stagnation to growth we present a growth model where agents divide time between rent seeking in the form of resource competition and working in a human capital sector the latter is interpreted as trade or manufacturing rent seeking exerts negative externalities on the productivity of human capital adding shocks in the form of fluctuations in the size of the contested resource the model can replicate a long phase with stagnant incomes and high levels of rent seeking interrupted by small failed growth spurts eventually followed by a permanent transition to a sustained growth path where rent seeking vanishes in the limit the model also generates a rise and fall of the so called natural resource curse before the takeoff an increase in the size of the contested resource has a positive effect on incomes shortly after the takeoff the effect is negative and on the balanced growth path the growth rate of per capita income is independent of resource shocks les auteurs presentent un modele de croissance ou les agents divisent leur temps entre la chasse aux rentes sous la forme de concurrence pour la ressource existante et le travail productif dans le secteur du capital humain cette derniere activite peut se faire dans le commerce ou le secteur manufacturier la chasse aux rentes a des effets externes negatifs sur la productivite du capital humain si l on injecte des chocs prenant la forme de fluctuations dans la taille de la ressource contestee le modele peut generer une longue periode durant laquelle les revenus stagnent et le niveau de chasse aux rentes est eleve periode interrompue par des petits sursauts de croissance qui tournent court et suivie eventuellement par une transition permanente a un sentier de croissance soutenue ou a la limite les activites de chasse aux rentes disparaissent le modele genere aussi l apparition et la disparition de la malediction des ressources naturelles avant que la croissance prenne son envol un accroissement de la taille de la ressource contestee a un effet positif sur les revenus peu apres le decollage l effet est negatif et sur le sentier de croissance equilibree le taux de croissance des revenus per capita est independant des chocs sur la ressource

the coevolution of economic and political development from monarchy to democracy this article establishes a unified political economy model to analyze the democratization process from monarchy to oligarchy and to democracy in the context of dynamic economic development as the predominant source of wealth evolves from land to physical capital and finally to human capital the relative economic and hence coercive power of land owners capitalists and workers shifts accordingly inducing the transition of the political system where political power is expanded from landlords to capitalists and finally to workers a smooth transition through political compromise facilitates efficient allocation of savings in physical capital followed by efficient investment in human capital

state capacity and long run economic performance we present new evidence about the long run relationship between state capacity the fiscal and administrative power of states and economic performance our database is novel and spans 11 european countries and 4 centuries from the old regime to world war i we argue that national governments undertook two political transformations over this period fiscal centralization and limited government we find a significant direct relationship between fiscal centralization and economic growth furthermore we find that an increase in the state s capacity to extract greater tax revenues was one mechanism through which both political transformations improved economic performance our analysis shows systematic evidence that state capacity is an important determinant of long run economic growth

printing and protestants an empirical test of the role of printing in the reformation the causes of the protestant reformation have long been debated this paper seeks to revive and econometrically test the theory that the spread of the reformation is linked to the spread of the printing press i test this theory by analyzing data on the spread of the press and the reformation at the city level an econometric analysis that instruments for omitted variable bias with a city s distance from mainz the birthplace of printing suggests that cities with at least one printing press by 1500 were at minimum 29 percentage points more likely to be protestant by 1600

the rise of europe atlantic trade institutional change and economic growth the rise of western europe after 1500 is due largely to growth in countries with access to the atlantic ocean and with substantial trade with the new world africa and asia via the atlantic this trade and the associatedcolonialism affected europe not only directly but also indirectly by inducing institutional change where initial political institutions those established before 1500 placed significant checks on the monarchy the growth of atlantic trade strengthened merchant groups by constraining the power of the monarchy and helped merchants obtain changes in institutions to protect property rights these changes were central to subsequent economic growth

inward looking policies institutions autocrats and economic growth in latin america an empirical exploration this paper explores the institutionaldeterminants of economic growth in latinamerica by taking advantage of recentempirical research that employs subjectiveand objective measures to test for apossible northian explanation that linksinstitutional quality and economic growth we explore a simple framework that may helpbetter understand the policymakers choicesand persistence regarding inward lookingpolicies that were pursued between the1930s and the 1980s by arguing that in thelatin american case olson s 1982 idea ofencompassing interest should be expanded tocover not only the economic stakes of powerholders but in particular their psychicincome which includes their politicalstakes along the lines of recent work byrobinson 1997 coyne 2002 andothers

medieval universities legal institutions and the commercial revolution we present new data documenting medieval europe s commercial revolution using information on the establishment of markets in germany we use these data to test whether medieval universities played a causal role in expanding economic activity examining the foundation of germany s first universities after 1386 following the papal schism we find that the trend rate of market establishment breaks upward in 1386 and that this break is greatest where the distance to a university shrank most there is no differential pre 1386 trend associated with the reduction in distance to a university and there is no break in trend in 1386 where university proximity did not change these results are robust to estimating a variety of specifications that address concerns about the endogeneity of university location universities provided training in newly rediscovered roman and canon law students with legal training served in positions that reduced the uncertainty of trade in the middle ages we argue that training in the law and the consequent development of legal and administrative institutions was an important channel linking universities and greater economic activity in medieval germany

princes and merchants european city growth before the industrial revolution as measured by the pace of city growth in western europe from 1000 to 1800 absolutist monarchs stunted the growth of commerce and industry a region ruled by an absolutist prince saw its total urban population shrink by one hundred thousand people per century relative to a region without absolutist government this might be explained by higher rates of taxation under revenue maximizing absolutist governments than under nonabsolutist governments which care more about general economic prosperity and less about state revenue

an economic theory of economic analysis the case of the school of salamanca the school of salamanca often is identified as the first economic tradition in the history of the dismal science its members anticipated principles later developed by the likes of adam smith and carl menger this paper provides an economic theory of the production of economic analysis by the doctors of salamanca beginning from the observation that producers of economic analysis respond to incentives the same way producers of meat beer or bread do historically the demand for economic analysis arises from two sources governments and interest groups i argue that the changes in international trade associated with the emergence of new transatlantic markets in the sixteenth century led to an increase in the demand for economic analysis by spanish merchants and that the contribution of the school of salamanca was grounded in the predictable supply response to those fresh incentives

how much expropriation hazard is too much the effect of land reallocation on organic fertilizer usage in rural china in china land is reallocated on either a full scale or a partial basis by employing a unique farm survey that deliberately draws a distinction between full scale and partial land reallocations and by decomposing their respective expropriation risk effects we find that the significantly negative effect of expropriation risk on organic fertilizer usage is driven solely by full scale reallocation consistent with this finding a reduction in the predicted expropriation hazard rate by half leads to a sizable increase of 491 in organic fertilizer usage in villages with a history of full scale reallocation and has an estimated productivity effect of 19 1

social capital innovation and growth evidence from europe this paper investigates the interplay between social capital innovation and economic growth in the european union we identify innovation as an important mechanism that transforms social capital into economic growth in an empirical investigation of 102 european regions in the period 1990 2002 we show that higher innovation performance is conducive to economic growth and that social capital affects growth indirectly by fostering innovation our estimates suggest that there is only a limited role for a direct effect of social capital on economic growth

protection of property rights and growth as political equilibria abstract this paper presents a survey of the literature on property rights and economic growth different theoretical mechanisms that relate property rights to economic development are discussed lack of protection of property rights can result in slow economic growth through different channels expropriation of private wealth corruption of civil servants excessive taxation and barriers to adoption of new technologies the origins of property rights are also considered different theories are illustrated but more attention is paid to the social conflict view and its success and limitations the second part of the paper illustrates relevant empirical works on property rights and growth

public goods institutions human capital and growth evidence from german history what are the origins and consequences of the state as a provider of public goods we study public goods provision established through new laws in german cities during the 1500s cities that adopted the laws subsequently began to differentially produce and attract human capital and to grow faster legal change occurred where ideological competition introduced by the protestant reformation interacted with local politics we study plagues that shifted local politics in a narrow period as sources of exogenous variation in public goods institutions and find support for a causal interpretation of the relationship between legal change human capital and growth

what does it take for a roving bandit settle down theory and an illustrative history of the visigoths a roving bandit provides exclusive rivalrous collective goods to members of its in group a stationary bandit further provides inclusive non rivalrous public collective goods to the out group the inclusive goods are an input to the production of the exclusive goods enjoyed by the in group as such the transition from roving to stationary bandit is likely to involve the redefinition of the in group its collective interest and the type of goods that it provides to illustrate these points i employ a case study of the roving visigothic confederacy as it evolved during the fourth and fifth centuries towards the stationary visigothic kingdom the illustration provides insights into why competition amongst roving bandits does not always or often lead to the emergence of a non predatory state

human capital and industrialization evidence from the age of enlightenment while human capital is a strong predictor of economic development today its importance for the industrial revolution is typically assessed as minor to resolve this puzzling contrast we differentiate average human capital worker skills from upper tail knowledge both theoretically and empirically we build a simple two sector model where worker skills raise the productivity in both agriculture and manufacturing and scientific knowledge affects the entrepreneurial ability to keep up with a rapidly advancing technological frontier the model predicts that the local presence of knowledge elites is unimportant in the pre industrial era but drives growth thereafter worker skills in contrast are not crucial for growth to measure the historical presence of knowledge elites we use city level subscriptions to the famous encyclopedie in mid 18th century france we show that subscriber density is a strong predictor of city growth after 1750 but not before the onset of french industrialization alternative measures of development confirm this pattern soldier height and industrial activity are strongly associated with subscriber density after but not before 1750 literacy on the other hand does not predict growth finally by joining data on british patents with a large french firm survey from 1837 we provide evidence for the mechanism upper tail knowledge raised the productivity in innovative industrial technology

the economic effects of the protestant reformation testing the weber hypothesis in the german lands following max weber many theories have hypothesized that protestantism should have favored economic development with its religious heterogeneity the holy roman empire presents an ideal testing ground for this hypothesis using population figures of 272 cities in the years 1300 1900 i find no effects of protestantism on economic growth the finding is precisely estimated robust to the inclusion of various controls and does not depend on data selection or small sample size denominational differences in fertility behavior and literacy are unlikely to be major confounding factors protestantism has no effect when interacted with other likely determinants of economic development instrumental variables estimates considering the potential endogeneity of religious choice are similar to the ols results

oligarchic versus democratic societies this paper develops a model to analyze economic performance under different political regimes an oligarchic society where political power is in the hands of major producers protects their property rights but also tends to erect significant entry barriers against new entrepreneurs democracy where political power is more widely diffused imposes redistributive taxes on producers but tends to avoid entry barriers when taxes in democracy are high and the distortions caused by entry barriers are low an oligarchic society achieves greater efficiency because comparative advantage in entrepreneurship shifts away from the incumbents the inefficiency created by entry barriers in oligarchy deteriorates over time the typical pattern is one of rise and decline of oligarchic societies an oligarchic society may first become richer but later fall behind a similar democratic society i also discuss how democracies may be better able to take advantage of new technologies how within elite conflict in oligarchies might cause a transition to democracy and how the unequal distribution of income may keep inefficient oligarchic institutions in place jel p16 o10

the power to tax analytical foundations of a fiscal constitution preface 1 taxation in constitutional perspective 2 natural government a model of leviathan 3 constraints on base and rate structure 4 the taxation of commodities 5 taxation through time income taxes capital taxes and public debt 6 money creation and taxation 7 the disposition of public revenues 8 the domain of politics 9 open economy federalism and taxing authority 10 toward authentic tax reform prospects and prescriptions epilogue notes selected bibliography index

property rights for the poor effects of land titling secure property rights are considered a key determinant of economic development the evaluation of the causal effects of property rights however is a difficult task as their allocation is typically endogenous to overcome this identification problem we exploit a natural experiment in the allocation of land titles in 1981 squatters occupied a piece of land in a poor suburban area of buenos aires in 1984 a law was passed expropriating the former owners land to entitle the occupants some original owners accepted the government compensation while others disputed the compensation payment in the slow argentine courts these different decisions by the former owners generated an exogenous allocation of property rights across squatters using data from two surveys performed in 2003 and 2007 we find that entitled families substantially increased housing investment reduced household size and enhanced the education of their children relative to the control group these effects however did not take place through improvements in access to credit our results suggest that land titling can be an important tool for poverty reduction albeit not through the shortcut of credit access but through the slow channel of increased physical and human capital investment which should help to reduce poverty in future generations

the first great divergence and the evolution of cross country income inequality during the last millennium the role of institutions and culture using a millennium of data for 12 countries in the east and in the west this article tests the extent to which contracting institutions property right institutions and culture can explain economic development and the great divergence it is tested whether these theories influence growth through science and technology or through human capital or channels that are independent of these two channels it is found that culture contracting institutions and property right institutions have all been relevant for growth and development

dictators and their viziers endogenizing the loyalty competence trade off the possibility of treason by a close associate has been a nightmare of most autocrats throughout history more competent viziers are better able to discriminate among potential plotters and this makes them more risky subordinates for the ruler to avoid this rulers especially those who are weakandvulnerable sacrificethecompetenceoftheiragents hiringmediocrebutloyalsubordinates furthermore any use of incentive schemes by a personalistic dictator is limited by the fact that all punishments are conditional on the dictator s own survival we endogenize loyalty and competence in a principal agent game between a dictator and his viziers in both static and dynamic settings the dynamic model allows us to focus on the succession problem that insecure dictators face jel d72 h00 c72 c82

why did the netherlands develop so early the legacy of the brethren of the common life this research establishes a link between the brethren of the common life bcl a religious community founded by geert groote in deventer in the late fourteenth century and the early economic development of the netherlands the bcl stimulated human capital accumulation the historical analyses show that the bcl contributed to the high rates of literacy to the high level of book production and to city growth in the netherlands these findings are supported by a set of ols regressions and further corroborated by 2sls estimates that use distance from deventer as an instrument for the presence of the bcl

earthquakes religion and transition to self government in italian cities this article presents a unique historical experiment to explore the dynamics of institutional change in the middle ages we have assembled a novel data set where information on political institutions for northern central italian cities between 1000 and 1300 is matched with detailed information on the earthquakes that occurred in the area and period of interest exploiting the panel structure of the data we document that the occurrence of an earthquake retarded institutional transition from autocratic regimes to self government the commune in cities where the political and the religious leaders were the same person episcopal see cities but not in cities where political and religious powers were distinct non episcopal see cities such differential effect holds for destructive seismic episodes and for events that were felt by the population but did not cause any material damage to persons or objects ancillary results show that seismic events provoked a positive and statistically significant differential effect on the construction and further ornamentation of religious buildings between episcopal and non episcopal see cities our findings are consistent with the idea that earthquakes interpreted in the middle ages as manifestation of the will and outrage of god represented a shock to people s religious beliefs and as a consequence enhanced the ability of political religious leaders to restore social order after a crisis relative to the emerging communal institutions this interpretation is supported by historical evidence

international trade and institutional change medieval venice s response to globalization international trade can have profound effects on domestic institutions we examine this proposition in the context of medieval venice circa 800 1600 early on the growth of long distance trade enriched a broad group of merchants who used their newfound economic muscle to push for constraints on the executive that is for the end of a de facto hereditary doge in 1032 and the establishment of a parliament in 1172 the merchants also pushed for remarkably modern innovations in contracting institutions that facilitated longdistance trade for example the colleganza however starting in 1297 a small group of particularly wealthy merchants blocked political and economic competition they made parliamentary participation hereditary and erected barriers to participation in the most lucrative aspects of long distance trade over the next two centuries this led to a fundamental societal shift away from political openness economic competition and social mobility and toward political closure extreme inequality and social stratification we document this oligarchization using a unique database on the names of 8 178 parliamentarians and their families use of the colleganza in the periods immediately before and after 1297 we then link these families to 6 959 marriages during 1400 1599 to document the use of marriage alliances to monopolize the galley trade monopolization led to the rise of extreme inequality with those who were powerful before 1297 emerging as the undisputed winners jel codes d02 f10 n43

state capacity and military conflict powerful centralized states controlling a large share of national income only begin to appear in europe after 1500 we build a model that explains their emergence in response to the increasing importance of money for military success when fiscal resources are not crucial for winning wars the threat of external conflict stifles state building as finance becomes critical internally cohesive states invest in state capacity while divided states rationally drop out of the competition causing divergence we emphasize the role of the military revolution a sequence of technological innovations that transformed armed conflict using data from 374 battles we investigate empirically both the importance of money for military success and patterns of state building in early modern europe the evidence is consistent with the predictions of our model

the emergence of property rights enforcement in early trade a behavioral model without reputational effects abstract the present article focuses on the conditions that allow governments to increase property rights protection because they expect enough income from such action we develop a behavioral explanation according to which the answer lies in the growth in the importance size and wealth of merchant guilds in the medieval era in western europe as well as a somewhat surprising effect of volatile price structures we add to prior research by showing that even uncoordinated embargo pressures among multiple guilds could get medieval rulers to offer high levels of property rights protection

the injustice of inequality in many countries the operation of legal political and regulatory institutions is subverted by the wealthy and the politically powerful for their own benefit this subversion takes the form of corruption intimidation and other forms of influence we present a model of such institutional subversion focusing specifically on courts and of the effects of inequality in economic and political resources on the magnitude of subversion we then use the model to analyze the consequences of institutional subversion for the law and order environment in the country as well as for capital accumulation and growth we illustrate the model with historical evidence from gilded age united states and the transition economies of the 1990s we also present some cross country evidence consistent with the basic prediction of the model

state owned mncs and host country expropriation risk the role of home state soft power and economic gunboat diplomacy expropriation risk has a binding effect on foreign direct investment fdi however state owned multinational corporations may counter the monopoly power of the host state by leveraging the political influence of their home government the magnitude of this counter force we argue may vary depending on the strength of political relations between the home and host state and the level of economic dependence of the host country on the home market we find supporting evidence of our hypotheses using chinese firm level fdi information between 2003 and 2010

the institutional environment for infrastructure investment the empirical evidence that links political institutions to economic outcomes has grown dramatically in recent years however virtually all of this analysis is undertaken using data from the past three decades this paper extends this empirical framework by performing a two century long historical analysis of the determinants of infrastructure investment in a panel of over 100 countries the results demonstrate that political environments that limit the feasibility of policy change are an important determinant of investment in infrastructure copyright 2002 oxford university press

a positive theory of the predatory state while the distinction between public and private goods is essential in developing a normative theory of non predatory states the focus of this article is on a positive theory of predatory states since the predatory relationship between the state and its subjects depends on the power of the state to grab or to appropriate coercively and the subject s ability to escape or hide the boundaries of the state are decided by the nature of the assets that can be taken more or less easily accordingly i will introduce a new distinction between captive and fugitive assets that positively captures the frontiers of a state space the us railroading in the nineteenth century provides an illustration regarding the explanatory power of an asset appropriating perspective of the state compared to a public goods approach

the role of law in economic growth a literature review abstract compared with other explanatory variables such as capital accumulation technological innovations geographical endowments economic openness and cultural factors institutions especially legal institutions have been regarded as a crucial condition for economic growth in recent years the importance of legal rules is systematically revealed by a series of cross country econometric studies conducted by la porta et al who claim that legal origins are central to understanding the divergence in living standards across the regions and countries of the world and compared with civil law countries especially those countries with french civil law tradition common law countries have enjoyed superior economic outcomes the controversies set off by la porta et al s proposition indicate that there are a number of questions that are difficult to explain by la porta et al s theory and hence call for more work on comparative analysis of different legal families before a consensus can be reached

rational bandits plunder public goods and the vikings the paper applies and extendsinsights from mancur olson s study of statemaking to the vikings in a world ofroving bandits a sub optimal provision ofpublic goods exists most notably ofsecurity roving banditry leads toover plundering and zero profits for theplunderers which makes stationary banditryprofitable the most efficient banditsmonopolize violence begin to tax andprovide some amounts of public goods inorder to stimulate economic growth theanalysis demonstrates how the vikings activities and settlements are consistentwith such an explanation with the dynamicsof the process being reflected in thevariation in the number of raids and theamount of wealth extracted

unbundling institutional determinants of multinational investments abstractprevious studies often examined how a broad based institution affects foreign direct investment fdi flows across countries however analysis of differential impacts of two or more constituent institutions within a broad based institution appears to be more useful for policy decision making there is a paucity of studies on how constituent institutions within a broad measure of institution affect fdi across countries our article constitutes the first attempt in bridging this gap in this article we examine the relative effects of property rights institution pi and contracting institution ci on investment flows our results show that pi is much more important than ci in determining the cross border flows of fdi and affiliate sales moreover pi is found to be more important for fdi than for affiliate sales indicating that final goods are less of a concern for being expropriated by governments and powerful elites than capital goods through unbundling a broad based institution and examining

delay and information aggregation in stopping games with private information abstract we consider equilibrium timing decisions in a model with a large number of players and informational externalities the players have private information about a common payoff parameter that determines the optimal time to invest they learn from each other in real time by observing past investment decisions we develop new methods of analysis for such large games and we give a full characterization of symmetric equilibria we show that the equilibrium statistical inferences are based on an exponential learning model although the beliefs converge to truth learning takes place too late ex ante welfare is strictly between that without observational learning and that with full information

government in transition abstract the speed of economic reforms is not the only important determinant of the success of the transition to a market economy the transition of government from a communist state to an institution supporting a market economy is as critical survey evidence shows that russia lags significantly behind poland in the transition of its government which may account for its inferior economic performance despite adopting similar economic reforms i argue that the lack of turnover of old communist politicians and the creation of inappropriate electoral and fiscal incentives for these politicians may account for the poor performance of the russian government and suggest some strategies for improving the situation