Here is the rest of the article from the Richmond Fed.Bils and Klenow got special permission to review the micro-data on prices and concluded that these prices actually change quite frequently, on average about every four months. That doesn't seem so sticky, Kehoe argues.
They also have an interesting exchange about the academic market for ideas.Roberts: What is your perception of the President as a consumer of economic
analysis?Mankiw: I think he's got a great intuition for economics—he doesn't think like an economist in the sense of thinking in terms of equations and graphs. He was an undergraduate history major and that's a pretty good description of how he thinks about things.
Acemoglu has several papers that argue that institutions play a more
prominent role in development than was generally accepted. His 2002 QJE paper
with Johnson and Robinson argues that countries that were relatively rich in
1500 are now relatively poor, a point that is inconsistent with the view that
geography is destiny. The argument, supported by empirical evidence, is that
this is due to colonizing countries treating rich and densely populated
countries differently from poor and sparsely populated countries. In the former,
they followed policies of extracting wealth and in the latter they followed
policies that encouraged investment. Acemoglu’s 2001 AER paper, also with
Johnson and Robinson, uses differences in mortality rates faced by Europeans in
different countries to study further the degree to which different policies lead
to different institutions, which in turn lead to different development paths.
Some of the methods and the conclusions of this paper are still being debated,
but this line of Acemoglu’s work has already stimulated substantial research
that rethinks the development process. In related work on political economy, for
example with Robinson in APSR 2001, he has examined the dynamics of political
processes and the persistence of inefficient policies. This work has been
influential in political science.
Levitt points out that Acemoglu's work challenges conventional wisdom which believes that democracies produces the highest possible growth rates. From the little research I did in this area I recall that is was long believed that totalitarian regimes could produce higher growth rates. Well, it was believed up until the Soviet Union Collapsed. Even after that happened the view that democracy was the key to growth often came with caveats. Freedoms are important for growth, but some freedoms impose costs that can constrain grwoth as well. Its probably less about democracy per se so and more about free and stable institutions, which seldom occur in non-democracies, or democracies for that matter.
Keywords: Growth, ECO120, ECO305
