Seminar: Fundamental Determinants of Economic Performance

Course content

The broad question asked is “Why are some societies richer than others?” The proximate answer is that these societies manage higher productivity rates and investment rates in human- and physical capital, but why is it that some societies are so much more productive and invest more than others? The answers can be grouped into three categories: institutions, culture, and geography. The purpose of this seminar is to explore these three “deep determinants of economic growth” empirically. We will be investigating empirically their origins and their consequences.

 

Students choose which of the three deep determinants they want to investigate, pose a relevant question, find a published paper that they partly replicate or just rely on in some way, and then do the econometric analysis necessary to answer the question.

 

Examples of topics that are relevant for this seminar:

  • The institutions of a country provide the formal rules within which we make decisions, and thus influence economic outcomes in various ways. Which institutions are good for growth and which are bad? And why do some countries develop “bad” institutions, while others end up with “good” institutions?
  • Our cultural values influence the decisions we make, including our economic decisions. Various economic outcomes have been linked to culture; fertility choices, labor force participation, health, etc. Even GDP per capita has been associated with differences in cultural values, such as individual religiosity, thriftiness, preferences for hard work, patience etc. But how does religiosity or patience influence growth or other economically relevant outcomes such as science development or investments? And why are some societies more religious, thrifty or patient than others?
  • Peeling off the layers of the onion in our search for the ultimate deep determinants of economic outcomes brings us back into history. Back then, all societies relied on agriculture and, thus, the deep roots of current economic differences is likely to involve differences in agriculture practices. These practices are highly dependent on the geographic and climatic surroundings of historic societies. In fact, certain geographic and climatic circumstances did influence economic outcomes of past societies, and these historic differences explain a major part of current economic differences.

 

Choice of topic: Choose one of the deep determinants and investigate either its’ origins or its’ consequences for some economically relevant outcome variable. After that, choose whether to replicate an existing paper partly or to conduct your own empirical analysis. Choosing a paper to base your analysis on is always a good place to start. Choose a paper published in one of the “good journals” (for instance top-50 of IDEAS’ ranking: https://ideas.repec.org/top/top.journals.simple.html). I emphasize the quality of the paper, since replicating a poor paper rarely produces a good paper. You can also get an indicator of the quality by investigating whether the author has otherwise published well.

 

Endogeneity problems will play an important role in the empirical work. For instance, when investigating the impact of institutions on GDP per capita, OLS analysis will include particularly two types of endogeneity bias; institutions and GDP per capita may both be influenced by various omitted factors (omitted variables bias), and GDP per capita levels may influence the quality of institutions (reverse causality bias). Students do not have to solve these endogeneity problems perfectly econometrically in order to pass the seminar, but the minimum criterion to pass is proper OLS regression analysis together with a discussion of endogeneity issues.

 

You are very welcome to contact me before the semester starts if you want my opinion on a paper that you want to use or a topic that you want to investigate: Jeanet.bentzen@econ.ku.dk.

Education

MSc programme in Economics

The seminar is primarily for students at the MSc of Economics

Learning outcome

Additional for the learning outcome specified in the Curriculum the student is after completing the seminar expected to be able to:

  • to conduct proper empirical analysis of macroeconomic questions. In particular, students will learn how to transform a hypothesis into something that we can test empirically and to think about which endogeneity problems that are crucial in the particular analysis.
  • to write a good paper; set up a hypothesis, motivate why it is relevant, describe how to test it, and last to test it.

 

Students will learn how to phrase an interesting research question and how to identify good papers from bad papers out there.

Students will learn how to motivate their question in an interesting way and how to transform a hypothesis into something that can be tested empirically.

Students will learn how to conduct an econometric analysis of macroeconomic questions. In particular, students will learn how to think about which endogeneity problems that are crucial in the particular analysis and also how to solve them.

Students will learn how to write a good paper; set up a hypothesis, motivate why it is relevant, describe how to test it, and last to test it.

Last, the students, who choose to do so, will learn how to use ArcGIS technology to transform any information with a spatial dimension (road density, average precipitation, distance to coast, vicinity to a boarder, etc) into variables that can be used for econometric analysis.

 

Activities:
- Kick-off meeting
- Finding literatur and defining the project
- Writing process of the seminar paper
- Presentation of own project and paper
- Giving constructive feedback to another student´s paper
- Actively participating in discussions at the presentations and other meetings.

At the seminar the student is trained independently to
- identify and clarify a problem,
- seek and select relevant literatur,
- write a academic paper,
- present and discuss own paper with the other students at the seminar.

The aim of the presentations is, that the student uses the presentation as an opportunity to practice oral skills and to receive feedback. The presentations is not a part of the exam and will not be assessed.

There is no weekly teaching/lecturing and the student cannot expect guidance from the teacher. If the teacher gives a few introduction lectures or gives the opportunity for guidance, this as well as other expectations are clarified at the kickoff meeting.

Process:
It is strongly recommended that you think about and search for a topic before the semester begins, as there is only a few weeks from the kick-off meeting to the submission of the project description/ agreement paper.

Before the presentations, your nearly finished version of the seminar project paper must be uploaded in Absalon, as the opponents and the other seminar participants have to read and comment on the paper. It is important that you upload a paper that is so finalized as possible due to the fact that the value of feedback and comments at the presentation is strongly associated with the skill level of the seminar paper.

After the presentations, you can with a few corrections improve the seminar paper by including the feedback and comments emerged during the presentations. It is NOT intended that you rewrite or begin the writing of the full project AFTER the presentation has taken place.

Literature: 

The seminar will involve various journal articles and recent working papers. Below are selected overview articles:

  • Acemoglu, D. (2009) Fundamental Determinants of Differences in Economic Performance, Introduction to Modern Economic Growth Chapter 4, Princeton University Press. Online: http://www.ppge.ufrgs.br/giacomo/arquivos/eco02237/acemoglu-2007.pdf
  • Guiso, L., P. Sapienza, and L. Zingales, Does Culture Affect Economic Outcomes? Journal of Economic Perspective 20 (2006):23–48.
  • Nunn, N. (2014) Historical Development, Handbook of Economic Growth Vol 2, Chapter 7, pp. 347-402, doi:10.1016/B978-0-444-53538-2.00007-1.
  • Some more specific papers for inspiration are:
  • Comin, D. A., Easterly, W., and E. Gong (2008) Was the Wealth of Nations Determined in 1000 BC? Working Paper 09-052.
  • Dell, M. (2010) The Persistent Effects of Peru’s Mining MITA, Econometrica 78 (6).
  • Dell, M., Jones, B. F., and B. A. Olken (2013) What Do We Learn from the Weather? The new Climate-Economy Literature, Journal of Economic Literature.
  • Michalopoulos, S. and E. Papaioannou (2014) National Institutions and Subnational Development in Africa, The Quarterly Journal of Economics, 151-213.
  • Nunn, N. and L. Wantchekon (2011) The Slave Trade and the Origins of Mistrust in Africa, American Economic Review, 101, 3221-3252.
  • Voigtländer, N. and H.-J. Voth (2012) Persecution Perpetuated, Quarterly Journal of Economics, 1339-1392.

It is recommended that student master Econometrics I well (regression analysis: OLS, IV and potentially also analysis of panel data).

Additional courses that will benefit your outcome of this seminar (but that are not required for a good grade) are Macro I (long run macro), Economic History, Advanced Development – Macro Aspects, and Advanced Microeconometrics.

BSc in Economics or similar.

Dates in the seminar:

• Kick-off meeting: 5 September 2019, 1.00-3.00 pm
• Teaching: 12 + 19 September 2019, 1.00-3.00 pm
• Teaching: twice times in october, Thursdays 1.00-3.00 pm
• Deadline commitment paper: not later than 1st of October at 10 AM (good idea to have found your main paper and main data by then)
• Deadline of pre-paper uploaded to Absalon: Around Nov 15th
• Presentations/Workshops: Around Nov 20th

Small exercises: The supervisor will ask you to hand in your critique of chosen papers in September, a preliminary first results table end of October, and preliminary first paragraph of introduction end October. The two latter will be followed by short practical lectures on econometrics and writing.

Throughout the semester there will be supervision meetings with those who find this necessary.

ECTS
7,5 ECTS
Type of assessment
Written examination
A seminar paper in English that meets the formal requirements for written papers stated in the curriculum of the Master programme and at KUNet for seminars.
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Aid
All aids allowed

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Marking scale
7-point grading scale
Censorship form
External censorship
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Criteria for exam assessment

Students are assessed on the extent to which they master the learning outcome for the seminar and can make use of the knowledge, skills and competencies listed in the learning outcomes in the Curriculum of the Master programme.

 

To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material.

  • Category
  • Hours
  • Seminar
  • 20
  • Project work
  • 186
  • English
  • 206