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Learning the Wealth of Nations

  • Francisco J. Buera
  • Alexander Monge-Naranjo
  • Giorgio E. Primiceri

We study the evolution of market-oriented policies over time and across countries. We consider a model in which own and neighbors' past experiences influence policy choices, through their effect on policymakers' beliefs. We estimate the model using a large panel of countries. We find that there is a strong geographical component to learning, which is crucial to explain the slow adoption of liberal policies during the postwar period. Our model also predicts that there would be a substantial reversal to state intervention if nowadays the world was hit by a shock of the size of the Great Depression.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14595.

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Date of creation: Dec 2008
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Publication status: published as Francisco J. Buera & Alexander Monge‐Naranjo & Giorgio E. Primiceri, 2011. "Learning the Wealth of Nations," Econometrica, Econometric Society, vol. 79(1), pages 1-45, 01.
Handle: RePEc:nbr:nberwo:14595
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