Institutions All the Way Down

Written by Ryan McGuine // In October, economists Daron Acemoglu, Simon Johnson, and James Robinson were awarded the Nobel Prize in Economic Sciences “for studies of how institutions are formed and affect prosperity.” While the Solow Model explains income differences between countries by the accumulation of physical capital and human capital, and rate of technological progress, Nobel laureate Douglass North wrote that rather than driving economic growth, these factors are economic growth. One thing that actually drives growth is institutions. Continue reading

Poor Economics, Great Economists

Written by Ryan McGuine // In October, economists Abhijit Banerjee, Esther Duflo, and Michael Kremer were awarded the Nobel Prize in Economic Sciences "for their experimental approach to alleviating global poverty." Until the 1980s, the field of development economics, which seeks to determine why some countries grow rich while others remain poor, was mostly concerned with big questions, debates about foreign aid were heavily ideological, and billions of dollars were spent on untested projects based on untested assumptions. Enter the Randomistas. Continue reading