Theory, General Equilibrium, and Political Economy in Development Economics
- (pp. 17-32)
AbstractI 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.
Citation2010. "Theory, General Equilibrium, and Political Economy in Development Economics." Journal of Economic Perspectives, 24(3): 17-32. DOI: 10.1257/jep.24.3.17
- D50 General Equilibrium and Disequilibrium: General
- O10 Economic Development: General
- P00 Economic Systems: General