Theory, General Equilibrium, and Political Economy in Development Economics

Daron Acemoglu

Journal of Economic Perspectives, 2010, vol. 24, issue 3, 17-32

Abstract: I discuss the role of economic theory in empirical work in development economics with special emphasis on general equilibrium and political economy considerations. I argue that economic theory plays (should play) a central role in formulating models, estimates of which can be used for counterfactual and policy analysis. I discuss why counterfactual analysis based on microdata that ignores general equilibrium and political economy issues may lead to misleading conclusions. I illustrate the main arguments using examples from recent work in development economics and political economy.

JEL-codes: D50 O10 P00 (search for similar items in EconPapers)
Date: 2010
Note: DOI: 10.1257/jep.24.3.17
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Citations: View citations in EconPapers (102)

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Working Paper: Theory, General Equilibrium and Political Economy in Development Economics (2010)
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