Publications

Working Paper
Gilles Serra. Working Paper. “The Electoral Strategies of a Populist Candidate: Does charisma discourage experience and encourage extremism?”.Abstract
I model an election between a populist candidate with little government experience and high charisma and a mainstream candidate with much government experience and low charisma. Taking a step back in time, I also model the career choices of this populist candidate: he must consider how much governing experience to acquire before running for high office, and then he must decide how extremist his campaign platform should be. The model finds two major trade-offs that are unfortunate for the median voter: candidates who are attractive in terms of their high charisma will be unattractive in terms of their low experience and high extremism. The model also finds that popular discontent, coming from an economic or political crisis, makes an inexperienced outsider more likely to win an election with an extremist agenda; this helps explain the recent ‘rise of populism’ identified by several authors around the world. This theory is also able to explain numerous empirical findings: I connect the model to the literature from different academic approaches (behavioral, comparative, and institutional) and different geographical regions (the United States, Latin America, and Europe). Special reference is made to four prominent outsiders: Donald Trump, Hugo Chávez, Alberto Fujimori, and Jean-Marie Le Pen.
serra2018.pdf
Dirk A. Zetzsche, William A. Birdthistle, Douglas W. Arner, and Ross P. Buckley. Working Paper. “Financial Operating Systems”.Abstract
The rise of financial technology (FinTech) and its potential impact on legal regimes have received close academic attention in recent years, but much of that scholarship has focused on the attributes of individual applications and technologies. By contrast, we focus on the less obvious – but far more significant – development of operating systems for finance, particularly those that govern the global economy for investment. As with software generally, these operating systems are relatively inconspicuous, but extremely powerful, particularly given their role in controlling the world’s $50 trillion investment fund industry, where they already play a significant role in asset management for pension funds and other major institutional investors. We identify the scope of these systems, the economic reasons for their dramatic ascendency, and the legal implications that arise from their possible failures and successes, highlighting the potential for such systems to escape regulation while simultaneously stifling innovation and competition.
Dirk A. Zetzsche, Ross P. Buckley, Douglas W. Arner, and Jànos N. Barberis. Working Paper. “From FinTech to TechFin: The Regulatory Challenges of Data-Driven Finance”.Abstract
Financial technology (‘FinTech’) is transforming finance and challenging its regulation at an unprecedented rate. Two major trends stand out in the current period of FinTech development. The first is the speed of change driven by the commoditization of technology, Big Data analytics, machine learning and artificial intelligence. The second is the increasing number and variety of new entrants into the financial sector, including pre-existing technology and e-commerce companies. This paper considers the impact of these new entrants with their typically large pre-existing non-financial services customer bases. These firms (loosely termed ‘TechFins’) may be characterised by their capacity to leverage the data gathered in their primary business into financial services. In other words, TechFins represent an Uber moment in finance. This shift from financial intermediary (FinTech) to data intermediary (TechFin) raises implications for incumbent financial services firms, FinTech startups and regulators. This seachange calls for analysis to underpin regulatory approaches with a view to balancing the competing interests of innovation, development, financial stability and consumer protection.
Ross P. Buckley, Douglas W. Arner, and Dirk A. Zetzsche. Working Paper. “Sustainability, FinTech and Financial Inclusion”.Abstract

We argue that sustainable balanced development is preconditioned on financial inclusion, and that FinTech is the key driver for financial inclusion. In turn, the full potential of FinTech to support the Sustainable Development Goals will only be realized with a progressive approach to developing infrastructure to support digital financial transformation.

Our research suggests the best way to think about such a strategy is to focus on four primary pillars. The first pillar requires the building of digital identity and simplified account opening and e-KYC systems. This is supported by the second pillar of open interoperable electronic payments systems. The third pillar involves using the infrastructure of the first and second to underpin electronic provision of government services and payments. The fourth pillar – digital financial markets and systems – supports broader access to finance and investment. Implementing the four pillars is a major journey, but one with tremendous potential to transform financial inclusion and sustainable growth.

Monica Martinez-Bravo, Priya Mukherjee, and Andreas Stegmann. Working Paper. “An Empirical Investigation of the Legacies of Non-Democratic Regimes: The Case of Soeharto's Mayors in Indonesia”. martinez-bravoetal2016.pdf
Avner Greif and Jared Rubin. Working Paper. “"Endogenous Political Legitimacy: The English Reformation and the Institutional Foundations of Limited Government."”.Abstract

This paper opens the ‘black box’of political legitimacy and asks what role, if any, it played in the transformation of pre-modern England’s political system to one based on representation and the rule of law. Accordingly, the paper …rst presents a theory of endogenous legitimacy and why it in‡uences the distribution of political power and thus policies, institutions, and outcomes. Applying this framework to England’s political history highlights the importance of the Reformation, following which the Catholic Church lost its legitimizing role. The Crown’s increasing reliance on Parliament and the laws it produced for legitimation changed the balance of political power in favor of Parliament. Legitimacy was thus central to the 17th-century Civil War and the Glorious Revolution, as the Stuart monarchs attempted to undermine the legitimizing role –and hence power –of Parliament. The analysis lends support to the view that institutions and culture are inter-related.

greifrubin2015.pdf
Erevna 2021: Impact Report
Priscilla Maryanski. Working Paper. Erevna 2021: Impact Report. erevna_2021_impact_report.pdf
Erevna Pitch Deck
Lucas Chu and Winni ZHeng. Working Paper. “Erevna Pitch Deck”. erevna_pitch_deck.pdf
Alberto Alesina, Guido Tabellini, and Francesco Trebbi. Working Paper. “"Is Europe an Optimal Political Area?"”.Abstract

Employing a wide range of individual-level surveys, we study the extent of cultural and
institutional heterogeneity within the EU and how this changed between 1980 and 2008. We present several novel empirical regularities that paint a complex picture. While Europe has experienced both systematic economic convergence and an increased coordination across national and subnational business cycles since 1980, this was not accompanied by cultural nor institutional convergence. Such persistent heterogeneity does not necessarily spell doom for further political integration, however. Compared to observed heterogeneity within member states themselves, or in well functioning federations such as the US, cultural diversity across EU members is a similar order of magnitude. The main stumbling block on the road to further political integration is not heterogeneity of tastes or of cultural traits, but other cleavages, such as national identities.

alesinaetal2017.pdf
Eleonora Broccardo, Oliver Hart, and Luigi Zingales. Working Paper. “Exit vs. Voice”.Abstract
We study the relative effectiveness of exit (divestment and boycott) and voice (engagement) strategies in promoting socially desirable outcomes in companies that generate externalities. We show that if the majority of investors are socially responsible, voice achieves the socially desirable outcome, while exit does not. If the majority of investors are purely selfish, exit is a more effective strategy, but neither strategy generally achieves the first best. We also show that individual incentives to join an exit strategy are not aligned with social incentives, and hence exit can lead to a worse outcome than if all individuals are purely selfish
hart_et_al_exit_vs_voice.pdf
Avidit Acharya, Matthew Blackwell, and Maya Sen. Working Paper. “"Explaining Attitudes from Behavior: A Cognitive Dissonance Approach"”.Abstract

The standard approach in positive political theory posits that action choices are the consequences of attitudes. Could it be, however, that an individual’s actions also affect her fundamental preferences? We present a broad theoretical framework that captures the simple, yet powerful, intuition that actions frequently alter attitudes as individuals seek to minimize cognitive dissonance. This framework is particularly appropriate for the study of political attitudes and enables political scientists to formally address questions that have remained inadequately answered by conventional rational choice approaches – questions such as “What are the origins of partisanship?” and “What drives ethnic and racial hatred?” We illustrate our ideas with three examples from the literature: (1) how partisanship emerges naturally in a two party system despite policy being multi-dimensional, (2) how ethnic or racial hostility increases after acts of violence, and (3) how interactions with people who express different views can lead to empathetic changes in political positions. 

acharyaetal2015.pdf
Farzana Afridi, Amrita Dhillon, and Eilon Solan. Working Paper. “"Exposing Corruption: Can Electoral Competition Discipline Politicians?"”.Abstract

In developing countries with weak institutions, there is implicitly a large reliance on elections to instill norms of accountability and reduce corruption. In this paper we show that electoral discipline may be ineffective in reducing corruption when political competition is too high or too low. We first build a simple game theoretic model to capture the effect of electoral competition on corruption. We show that in equilibrium, corruption has a U-shaped relationship with electoral competition. If the election is safe for the incumbent (low competition) or if it is extremely fragile (high competition) then corruption is higher, and for intermediate levels of competition, corruption is lower. We also predict that when there are different types of corruption, then incumbents increase corruption in the components that voters care less about regardless of competition. We test the model’s predictions using data gathered on audit findings of leakages from a large public program in Indian villages belonging to the state of Andhra Pradesh during 2006-10 and on elections to the village council headship in 2006. Our results largely confirm the theoretical results that competition has a non-linear effect on corruption, and that the impact of electoral competition varies by whether theft is from the public or private component of the service delivery. Overall, our results suggest that over-reliance on elections to discipline politicians is misplaced.

afridietal2016.pdf
Gabriel Leon. Working Paper. “Feudalism, Collaboration, and Path Dependence in England's Political Development”.Abstract
This article presents a formal model of path dependence inspired by England’s history. The introduction of feudalism after the Norman Conquest – the critical juncture – created a large elite that rebelled frequently. The king fought these revolts with the help of collaborators he recruited from the masses. In compensation, he made these collaborators members of the elite. This was a cost-effective form of compensation: rents were only partly rival, and so new elite members only partially diluted the rents received by the king. The dilution from adding new members decreased as the elite grew in size, generating positive feedback and path dependence. This mechanism can account for the extension of rights in England in the early stages of its journey towards democracy.
leon2018.pdf
Richard Grossman and Hugh Rockoff. Working Paper. “"Fighting the Last War: Economists on the Lender of Last Resort"”.Abstract

In this paper we trace the evolution of the lender of last resort doctrine—and its implementation—from the nineteenth century through the panic of 2008. We find that typically the most influential economists “fight the last war”: formulating policy guidelines that would have dealt effectively with the last crisis or in some cases the last two or three. This applies even to the still supreme voice among lender-of-last-resort theorists, Walter Bagehot, who wrestled with the how to deal with the financial crises that hit Britain between the end of the Napoleonic Wars and the panic of 1866. Fighting the last war may leave economists unprepared for meeting effectively the challenge of the next war.

grossmanrockoff2015.pdf
Prasenjit Duara. Working Paper. “Fluid Histories: Oceans as Metaphor and the Nature of History”. duara_fluid_histories.pdf
Josiah Ober and Barry Weingast. Working Paper. “"Fortifications and Democracy in the Ancient Greek World."”.Abstract
In the modern world, access-limiting fortification walls are not typically regarded as promoting democracy. But in Greek antiquity, increased investment in fortifications was correlated with the prevalence and stability of democracy. This paper sketches the background conditions of the Greek city-state ecology, analyzes a passage in Aristotle’s Politics, and assesses the choices of Hellenistic kings, Greek citizens, and urban elites, as modeled in a simple game. The paper explains how city walls promoted democracy and helps to explain several other puzzles: why Hellenistic kings taxed Greek cities at lower than expected rates; why elites in Greek cities supported democracy; and why elites were not more heavily taxed by democratic majorities. The relationship between walls, democracy, and taxes promoted continued economic growth into the late classical and Hellenistic period (4th-2nd centuries BCE), and ultimately contributed to the survival of Greek culture into the Roman era, and thus modernity. We conclude with a consideration of whether the walls-democracy relationship holds in modernity.
oberweingast2017.pdf
Anaïde Nahikian and Emmanuel Tronc. Working Paper. “Fragile Future: The human cost of conflict in Afghanistan”. Publisher's VersionAbstract
This context analysis examines the humanitarian, political, societal, and economic dimensions that make the protracted conflict in Afghanistan intractable and precarious for civilian populations. The report is based on field visits to numerous regions in Afghanistan in July 2018 — which included interviews and consultations with a variety of actors, including political stakeholders, humanitarian agencies, and populations affected by conflict — as well as a review of recent and relevant literature. The purpose of this analysis is to (1) provide a current assessment of the conflict, drawing from field interviews and an in- depth assemblage of various reports and resources, (2) examine the interconnected and interdependent interests fueling the conflict, and (3) suggest that if these dynamics persist in the way they have for decades, recent elections and peace talks will represent yet another setback for Afghan communities and a peaceful future for the country.
Freedom from Violence and the Law: A Global Perspective
Rangita Silva de de Alwis and Jeni Klugman. Working Paper. “Freedom from Violence and the Law: A Global Perspective”.
Satsuki Takahashi. Working Paper. “From Post-Hiroshima to Post-Fukushima: Living with the Troubled Ocean in Japan's Unending Modernization”. takahashi_from_post-hiroshima_to_post-fukushima.pdf
Nauro F Campos, Menelaos G Karanasos, and Bin Tan. Working Paper. “"From Riches to Rags, and Back? Institutional Change, Financial Development and Economic Growth in Argentina since the 1890s"”.Abstract

Argentina is the only country in the world that was “developed” in 1900 and “developing” in 2000. The various competing explanations highlight, mainly, the roles of trade openness, political institutions, financial integration, financial development, and macroeconomic instability. Yet no study has, to the best of our knowledge, attempted a quantitative assessment of the relative importance of each of these competing explanations. This paper tries to fill this gap. It investigates their individual effects on economic growth and volatility using the power-ARCH framework with annual data since the 1890s. The results indicate that financial development and institutional change are the two main factors that help understand the extraordinary growth trajectory of Argentina over the last century.

camposetal2014.pdf

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