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    Djankov, Simeon, Edward Glaeser, Rafael LaPorta, Florencio Lopez-de-Silanes, and Andrei Shleifer. 2003. “The New Comparative Economics.” Journal of Comparative Economics 31 (4): 595-619. Abstract

    In recent years, the field of comparative economics refocused on the comparison of capitalist economies. The theme of the new research is that institutions exert a profound influence on economic development. We argue that, to understand capitalist institutions, one needs to understand the basic tradeoff between the costs of disorder and those of dictatorship. We apply this logic to study the structure of efficient institutions, the consequences of colonial transplantation, and the politics of institutional choice. Journal of Comparative Economics 31 (4) (2003) 595–619. World Bank, Washington, DC 20433, USA; Harvard University, Cambridge, MA 02138, USA; Dartmouth College, Hanover, NH 03755, USA; Yale University, New Haven, CT 06520, USA.
    Copyright 2003 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved.

    LaPorta, Rafael, Florencio López-de-Silanes, Cristian Pop-Eleches, and Andrei Shleifer. 2004. “Judicial Checks and Balances.” Journal of Political Economy 112 (2): 445-420. Abstract

    In the Anglo-American constitutional tradition, judicial checks and balances are often seen as crucial guarantees of freedom. Hayek distinguishes two ways in which the judiciary provides such checks and balances: judicial independence and constitutional review. We create a new database of constitutional rules in 71 countries that reflect these provisions. We find strong support for the proposition that both judicial independence and constitutional review are associated with greater freedom. Consistent with theory, judicial independence ac- counts for some of the positive effect of common-law legal origin on measures of economic freedom. The results point to significant benefits of the Anglo-American system of government for freedom.

    Murphy, Kevin M, and Andrei Shleifer. 2004. “Persuasion in Politics.” American Economic Review Papers and Proceedings 94 (2): 435-439. Abstract

    Recent research on social psychology and public opinion identifies a number of empirical regularities on how people form beliefs in the political and social spheres. First, beliefs are flexible and can be relatively easily influenced, particularly in areas where people do not have significant personal involvement (Doris Graber, 1984; John Zaller, 1992). Second, social influence shapes decisions: people are often persuaded by those they personally interact with (Mark Grasnovetter, 1973; Robert Cialdini, 1984). Such influence from friends, co-workers, and other “discussants” significantly affects the decisions on whether and how to vote (Paul Beck et al., 2002). Third, in the political arena, voter awareness of specific issues is quite low, and hence susceptibility to persuasion is high (Zaller, 1992).
    We present a model of the creation of social networks, and of their use by politicians to obtain support, motivated by these empirical findings. These networks can be political par- ties, trade unions, religious coalitions, political action committees, or even listeners of Rush Limbaugh’s radio show. The key idea is that people are influenced by those inside their net- work, but not by those outside, because those inside a network talk to and persuade each other. Networks are created by entrepreneurs using core issues that are centrally important to members, such as religious beliefs or union wages, but can then be “rented out” to politicians who seek votes as well as support for other initiatives and ideas, which might have little to do with their members’ core beliefs.

    Treisman, Daniel, and Andrei Shleifer. 2004. “A Normal Country.” Foreign Affairs 83 (2): 20-38.
    Botero, Juan, Simeon Djankov, Rafael LaPorta, Florencio López-de-Silanes, and Andrei Shleifer. 2004. “The Regulation of Labor.” Quarterly Journal of Economics 119 (4): 1339-1382. Abstract

    We investigate the regulation of labor markets through employment, collective relations, and social security laws in 85 countries. We find that the political power of the left is associated with more stringent labor regulations and more generous social security systems, and that socialist, French, and Scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries. However, the effects of legal origins are larger, and explain more of the variation in regulations, than those of politics. Heavier regulation of labor is associated with lower labor force participation and higher unemployment, especially of the young. These results are most naturally consistent with legal theories, according to which countries have pervasive regulatory styles inherited from the transplantation of legal systems.

    Barberis, Nicholas, Andrei Shleifer, and Jeffrey Wurgler. 2005. “Comovement.” Journal of Financial Economics 75 (2): 283-317. Abstract

    Building on Vijh (Rev. Financial Stud. 7 (1994)), we use additions to the S&P 500 to distinguish two views of return comovement: the traditional view, which attributes it to comovement in news about fundamental value, and an alternative view, in which frictions or sentiment delink it from fundamentals. After inclusion, a stock’s beta with the S&P goes up. In bivariate regressions which control for the return of non-S&P stocks, the increase in S&P beta is even larger. These results are generally stronger in more recent data. Our findings cannot easily be explained by the fundamentals-based view and provide new evidence in support of the alternative friction- or sentiment-based view.
    Copyright 2004 Elsevier B.V. All rights reserved.

    Glaeser, Edward L, and Andrei Shleifer. 2005. “The Curley Effect.” Journal of Law, Economics, and Organization 21 (1): 1-19. Abstract

    James Michael Curley, a four-time mayor of Boston, used wasteful redistribution to his poor Irish constituents and incendiary rhetoric to encourage richer citizens to emigrate from Boston, thereby shaping the electorate in his favor. As a consequence, Boston stagnated, but Curley kept winning elections. We present a model of using redistributive politics to shape the electorate, and show that this model yields a number of predictions opposite from the more standard frameworks of political competition, yet consistent with empirical evidence.