Microeconomics of Political Economy and Policy Analysis

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9410190 Green Recent developments in economic theory make it possible to address a broad range of policy questions more satisfactorily than in the past. Such developments include models of bargaining, optimal decisions and equilibrium under risk, and optimal provision of incentives to individuals who possess private information. This project applies such models to two issues: (1) how democratic institutions emerge and (2) the relationship between gender, fertility, education, and growth both at a theoretical and an empirical level. Most of the countries with outstanding records of sustained economic growth throughout most of the past several centuries are the same countries that have had some sort of democratic system throughout most of that period. This project focuses on the association between stable democratic government and sustained economic growth in these nations. This relationship is poorly understood. In fact, our scientific understanding of why democratic systems emerge at all is still sketchy. This project extends and evaluates (in light of historical data) a new theory by the investigators on how parliamentary governments emerge. This theory emphasizes how parliamentary systems can emerge initially as a rational response to the incentive problems of rulers caused by private information. The other part of the project examines the relationship between women's status and economic development, with particular emphasis on the role of fertility and education. Several economic models to date have examined education and fertility choices and their importance for economic development. However, all of these models completely ignore gender by studying the behavior of fictitious, genderless economic agents. But empirical evidence for a number of developing and developed countries shows that women receive less education that men. This project develops a two-sex bargaining model of endogenous growth and explores the relationship bet ween gender, fertility, education, and growth both at a theoretical and an empirical level.