Learning the Wealth of Nations
University of California, Los Angeles (UCLA) - Department of Economics; National Bureau of Economic Research (NBER)
Pennsylvania State University
Giorgio E. Primiceri
Northwestern University - Department of Economics; National Bureau of Economic Research (NBER)
CEPR Discussion Paper No. DP8030
We study the evolution of market-oriented policies over time and across countries. We consider a model in which own and neighbors' past experiences influence policy choices through their effect on policymakers' beliefs. We estimate the model using a large panel of countries and find that it fits a large fraction of the policy choices observed in the postwar data, including the slow adoption of liberal policies. Our model also predicts that there would be reversals to state intervention if nowadays the world was hit by a shock of the size of the Great Depression.
Number of Pages in PDF File: 50
Keywords: beliefs, development, growth, market-oriented policy
JEL Classification: O11, O43, P00working papers series
Date posted: November 22, 2010
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