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ECON 214: TOPICS IN DEVELOPMENT ECONOMICS I
1 General Information
1.1 Outline
Winter 2012
PRELIMINARY SYLLABUS
Giacomo De Giorgi
Stanford University
Email: degiorgi@stanford.edu
Office hours: Wednesday 11am-12.30pm
Landau, Room 224
The reading list includes several papers. The lectures, however, will focus on one or two of them,
marked below by (*). The others constitute optional reading. There is no real textbook for this
course. However, you will find several chapters of Debraj Ray’s book Development Economics
(Princeton University Press, 1998) a useful introduction to the topics (undergraduate level).
Some chapters of Lars Ljungqvist and Tom Sargent’s book Recursive Macroeconomic Theory
(MIT press 2004) are also very useful. These chapters are indicated in the reading list below.
Bardhan and Udry (1999) covers a limited part of the course. Two newer books are rather
interesting: 1. Poor Economics [Banerjee and Duflo (2011)] and More than Good Intentions
[Karlan and Appel (2011)].
The focus is on reading and understanding current empirical research in Development eco-
nomics, while touching various formal modeling issues. Participation is key during lectures and
I therefore expect you to have read the main papers for the class.
I expect each student to present a paper of choice among a “feasible” set. Aside from the
presentation the requirements are: either 1) a short paper (proposal) on a development topic
of your choice, this can then be continued in the spring term with Prof. Dupas; or 2) three
referee reports on assigned papers. Plus one problem set to be handed in.
I would highly recommend option 1) since the paper might become an initial draft towards
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a second year paper and potentially a publishable piece of research. Further you can continue
working on it in the spring quarter for Econ 215 with Prof. Dupas.
The class grade is as follows: problem set (40%), referee reports (35%), class presentation of
assigned paper (15%), class participation (10%). If you however decide to take the opportunity
of writing a paper (proposal) that would count for 75% of the grade, while presentation and
participation weigh 15% and 10% respectively.
The schedule is tentative and as you will notice does not cover the 10 weeks of classes. This
is because the precise timing of students’ presentations will have to be defined once we have
the final class attendance.
1.2 Timing of events
OPTION 1): I expect you to come and see me by the end of week 3 to discuss some initial
ideas. A preliminary research proposal should be prepared by the end of week 5. After that
date you will have up to the end of the quarter to hand in your paper.
OPTION 2): Problem set 1 will be posted on week 3 after Wednesday’s class and it is due on
the following Wednesday. Referee reports are due on Wednesdays by the end of the class in
week 5, 7 and 9. No late work will be graded.
1.3 Other Policies
The Economics Department has a common set of course management policies. These policies
govern such matters as late work, missed examinations, and re-grading. If you are not familiar
with these policies, make sure you read them carefully and familiarize yourself with them. They
can be found at: http://www-econ.stanford.edu/academics/courses.html
Students with Documented Disabilities: The Provost has asked instructors to include the follow-
ing paragraph in the syllabus: Students who have a physical, psychological or learning disability
that may necessitate an academic accommodation or the use of auxiliary aids and services in
a class must initiate the request with the Student Disability Resource Center (SDRC). The
SDRC will evaluate the request along with the required documentation, recommend appropri-
ate accommodations, and prepare a verification letter dated in the current academic term in
which the request is being made. Please contact the SDRC as soon as possible; timely notice
is needed to arrange for appropriate accommodations. The SDRC is located at 563 Salvatierra
Walk (Phone 723-1066).
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2 Reading List
2.1 Consumption Smoothing and Insurance
[WEEK 1]
Chapter 15 of Ray (1998).
Chapter 7 of Ljungqvist and Sargent (2000)
(*) Townsend, R., (1994), “Risk and Insurance in Village India”, Econometrica, 62(3): 539-591.
Fafchamps, M. and Lund, S., (2003), “Risk-sharing Networks in Rural Philippines”, Journal of
Development Economics, 71(2): 261-87.
Mazzocco, M. and Saini, S., (2011), “Testing Efficient Risk Sharing with Heterogeneous Risk
Preferences,” forthcoming American Economic Review.
Rosenzweig, M. (1988a), “Risk, Private Information, and the Family,” American Economic
Review, 78(2): 245-50.
Rosenzweig, M. (1988b), “Risk, Implicit Contracts and the Family in Rural Areas of Low-
Income Countries”, The Economic Journal, 98(393): 1148-70.
Townsend, R., (1995a), “Consumption Insurance: An Evaluation of Risk-Bearing Systems in
Low-Income Economies”, The Journal of Economic Perspectives, 9(3): 83-102.
Townsend, R., (1995b), “Financial Systems in Northern Thai Villages,” The Quarterly Journal
of Economics, 110(4): 1011-46.
Udry, C. (1994), “Risk and Insurance in a Rural Credit Market: An Empirical Investigation in
Northern Nigeria,” Review of Economic Studies, 61(3): 495-526.
Udry, C. (1995), “Risk and Saving in Northern Nigeria”, American Economic Review, 85(5):
1287-1300.
2.2 Lack of Enforceability and Imperfect Insurance
[WEEK 2]
Chapter 15 of Ljungqvist and Sargent (2004)
(*) Coate, S. and Ravallion, M., (1993), “Reciprocity without Commitment,” Journal of De-
velopment Economics, 40(1): 1-24.
(*) Ligon, E., Thomas, J. and Worrall, T.,(2002), “Informal Insurance Arrangements in Village
Economies,” Review of Economic Studies, 69(1): 209-44.
Angelucci, M., De Giorgi, G. and Rasul, I., (2011), “Insurance and Investment within Family
Networks,” mimeo Stanford University.
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Albarran, P. and Attanasio, P, (2002), “Empirical Implications of Imperfect Enforceability:
Evidence from Mexican Villages”, UCL Mimeo.
Attanasio, P. and Rios Rull, V., (2000a), “Consumption Smoothing in Island Economies: Can
Public Insurance Reduce Welfare?” European Economic Review, 44(7): 1225-58.
Kehoe, P. and Perri, F., (2004), “Competitive Equilibria with Limited Enforcement”, Journal
of Economic Theory, 119(1): 184-206.
Kocherlakota, N., (1996), “Implications of efficient risk sharing without commitment,” Review
of Economic Studies, 63: 595-609.
2.3 Social Networks and Informal Institutions
[WEEK 3]
(*) Banerjee, A. and Newman, A., (1998), “Information, the Dual Economy, and Development,”
Review of Economic Studies, 65(4): 631-53.
(*) Munshi, K., (2003), “Networks in the Modern Economy: Mexican Migrants in the U. S.
Labor Market,” The Quarterly Journal of Economics, 118(2): 549-97.
(*) Knack, S. and Keefer, P., (1997), “Does Social Capital have an Economic Payoff? A Cross-
Country Investigation,” The Quarterly Journal of Economics, 112(4): 1251-88.
Bramoullé, Y. and Kranton, R., (2007a), “Risk Sharing Across Communities,” American Eco-
nomic Review Papers and Proceedings, 97 (2), pp. 70-74.
Bramoullé, Y. and Kranton, R., (2007b), “Risk Sharing Networks,” Journal of Economic Be-
havior and Organization, 64 (3-4): 275-94.
Genicot, G. and Ray, D., “Group Formation in Risk-Sharing Arrangements,” Review of Eco-
nomic Studies, 70(1): 87-113.
Greif, A. (1993): “Contract enforceability and economic institutions in early trade: the Maghribi
Trader’s coalitions,” American Economic Review, 83(3): 525-48.
Narayan, D. and Pritchett, L., (1997), “Cents and Sociability: Household Income and Social
Capital in Rural Tanzania,” World Bank Policy Research Working Paper No. 1796.
Durlauf, S. and Fafchamps, M., (2005), “Social Capital,” in Handbook of Economic Growth,
Volume 1B, Ch. 26, Steven Durlauf and Philippe Aghion (eds.)
2.4 Program Evaluation
[WEEK 4]
This part will be mostly based on lecture notes.
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Blundell, R. and Costa-Dias, M., (2000), “Evaluation Methods for Non-Experimental Data,”
Fiscal Studies, 21(4): 427-68.
Duflo, E., Glennerster, R. and Kremer, M., (2007), “Using Randomization in Development
Economics Research: A Toolkit,” CEPR DP: 6059.
Heckman, J., Lalonde, R. and Smith, J., (1999), “The Economics and Econometrics of Active
Labor Market Programs,” Handbook of Labor Economics, Volume 3, Ashenfelter, A. and D.
Card, eds., Amsterdam: Elsevier Science.
Ravallion, M.,“The Mystery of the Vanishing Benefits: Ms Speedy Analysts Introduction to
Evaluation ,” World Bank WP: 2153.
2.5 Joint Liability and Micro-Credit
[WEEK 5 and 6]
(*) Burgess, R. And Pande, R., (2005), “Can Rural Banks Reduce Poverty? Evidence from the
Indian Social Banking Experiment,” American Economic Review, 95(3): 780-95.
(*) Ghatak, M. and Guinnane, T., (1999), “The Economics of Lending with Joint Liability :
Theory and Practice,” Journal of Development Economics, 60(1): 195-228.
(*) Giné, X. and Karlan, D., Peer Monitoring and Enforcement: Long Term Evidence from
Microcredit Lending Groups with and without Group Liability (January 2008)
de Mel, S., McKenzie, D. and Woodruff, C., (2008), “Are Women More Credit Constrained?
Experimental Evidence on Gender and Microenterprise Returns,” World Bank WP: 4746.
Karlan, D. and Zinman, J., (2007), “Observing Unobservables: Identifying Information Asym-
metries with a Consumer Credit Field Experiment,” mimeo Yale.
Banerjee, A., Duflo, E. and Munshi, K., (2003), “The (mis)-allocation of capital,” Journal of
European Economic Association, Papers and Proceedings: 484-94.
Ghosh, P., Mookherjee, D. and Ray, D., ‘Credit Rationing in Developing Countries: An
Overview of the Theory,” by, Chapter 11 in Readings in the Theory of Economic Develop-
ment, edited by D. Mookherjee and D. Ray, London: Blackwell, 2000.
Karlan, D., (2007), “Social Connections and Group Banking,” Economic Journal, 117: F52-F84.
Morduch, Jonathan (1999), “The Microfinance Promise,” Journal of Economic Literature,
37(4): 1569-1614.
Pitt, M. and Khandker, S., (1998), “The Impact of Group-based Credit Programs on Poor
Households in Bangladesh: Does the Gender of Participants Matter?,” Journal of Political
Economy, 106(5): 958-96.
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2.6 Institutions and the Process of Development
[WEEK 7]
(*) Acemoglu, D., Johnson, S. and Robinson, J., (2001), “The colonial origins of comparative
development: An empirical investigation,” American Economic Review, 91(5): 1369-1401.
(*) Hall, R. and Jones, C., (1999), “Why do some countries produce so much more output per
worker than others?,” Quarterly Journal of Economics, 114(1), 83-116.
Acemoglu, D., Johnson, S. and Robinson, J., (2002), “Reversal of fortune: Geography and
institutions in the making of the modern world income distribution,” The Quarterly Journal of
Economics, 117(4): 1231-94.
Greif, A., (2006), “Institutions and the Path to the Modern Economy: Lessons from Medieval
Trade,” Cambridge University Press.
Pande, R. and Udry, C., (2005), “Institutions and Development: A View from Below,” in the
Proceedings of the 9th World Congress of the Econometric Society, edited by R. Blundell, W.
Newey, and T. Persson, Cambridge University Press, 2005
2.7 Climate and the Process of Development
[WEEK 8]
As this is a “hot” topic of active research we will update the reading list as we go.
(*) Dell, Jones and Olken, (2009), Climate Shocks and Economic Growth: Evidence from
the Last Half Century, NBER WP
Deschenes, O. and Greenstone, M., Climate Change, Mortality, and Adaptation, Evidence
from Annual Fluctuation in Weather in the US, NBER Working Paper 13178
Burgess, R., Deschenes, O., Donaldson, D. and Greenstone, M., Weather and Death in
India: Mechanisms and Implications of Climate Change, in progress
Felkner, J., Tazhibayeva, K. and Townsend, R.. 2009. “Impact of Climate Change on Rice
Production in Thailand,” American Economic Review, P&P, 99(2): 20510.
2.8 Papers for Students’ Presentation and Reports
The list below is preliminary as we will add a few more papers depending on demand and
interests at a later stage.
[WEEK 5]
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Mazzocco, M. and Saini, S., (2011), “Testing Efficient Risk Sharing with Heterogeneous Risk
Preferences,” forthcoming the American Economic Review.
Kinnan, C., (2011), “Distinguishing barriers to insurance in Thai villages,” mimeo Northwestern
[WEEK 7]
Beaman, L., (2011), “Social Networks and the Dynamics of Labor Market Outcomes: Evidence
from Refugees Resettled in the U.S,” Forthcoming, Review of Economic Studies.
Kinnan, C. and Townsend, R., (2011), “Kinship and Financial Networks, Formal Financial
Access and Risk Reduction,” mimeo MIT
[WEEK 9]
Jensen, R., (2000), “Agricultural Volatility and Investment in Children,” the American Eco-
nomic Review, 90(2)
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