Theory, General Equilibrium and Political Economy in Development Economics

Daron Acemoglu

No 15944, NBER Working Papers from National Bureau of Economic Research, Inc

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: B41 D50 O10 O12 P48 (search for similar items in EconPapers)
Date: 2010-04
New Economics Papers: this item is included in nep-cba, nep-dev, nep-dge, nep-hpe and nep-pol
Note: DAE POL
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Citations: View citations in EconPapers (96)

Published as Daron Acemoglu, 2010. "Theory, General Equilibrium, and Political Economy in Development Economics," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 17-32, Summer.

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Journal Article: Theory, General Equilibrium, and Political Economy in Development Economics (2010)
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