The movement of labor out of agriculture is a central feature of the development process. A long-held view is that successful development requires that much of the labor released from agriculture be allocated to manufacturing rather than services. Rodrik's (2013) finding of unconditional convergence for manufacturing productivity, using data from UNIDO, provided empirical support for this view. We argue that the UNIDO data are ill-suited for studying cross-country productivity dynamics. Using recently released GGDC data designed for this purpose, we revisit the issue and find no evidence of unconditional convergence in manufacturing productivity over 1990-2018.
We show that the equilibrium loan-to-value (LTV) distribution in the US mortgage market has been remarkably stable over the last quarter century, both in aggregate and region by region, despite large, cross-sectionally heterogeneous house price cycles. While high-LTV mortgages changed from being explicitly government backed to privately securitized and back, their overall fraction remained unchanged. A repeat-sales methodology and an analysis of loan performance confirm that this stability in the distribution of LTVs holds even within subgroups of the population. These findings are inconsistent with models of credit cycles that use changes in collateral constraints to generate boom-and-bust dynamics in house prices. (JEL C43, E32, G21, G51, R21, R31)
We develop a method for delineating prime locations—ultradense clusters of economic activity—within cities and apply it to comprehensive establishment data covering all US metropolitan areas. We further use big data to extend the analysis to a global context where administrative data are sparse. Many cities in the United States and around the world are dominated by a small number of prime locations that can concentrate up to one-half of tradable services jobs on tiny shares of land and are dominant centers of economic gravity. In cities with fewer prime locations, a larger tradable services share concentrates in them. (JEL C55, R23, R32, R38, R52, R58)
We study whether the Coase conjecture holds for bargaining during war. Two players, A and B, contest a divisible resource until one side collapses or agreement is reached. If player B is militarily strong, then he insists on getting a large share. However, player A only concedes this large share if player B credibly signals his strength by fighting a sufficiently long war. Thus, the Coase conjecture fails, and asymmetric information about military strength explains why long wars may be inevitable. Using a mechanism design approach, we derive a lower bound on the expected duration of war. (JEL C78, D74, D82, F51)
Using an evolutionary approach, we address the prominent tension in the literature that updating of ambiguity and nonexpected-utility preferences cannot, in general, be both dynamically consistent and consequentialist. Perhaps not surprisingly, evolutionary optimality requires dynamic consistency. The more subtle insight is the evolutionary optimality of systematic violations of consequentialism. We base our investigation on the model of adaptive preferences (Sadowski and Sarver 2024), which generalizes the model of Robson (1996) and nests variants of many well-known models in the literature.
