Working Papers

• Structural Change and Democratization: Evidence from Rural Apartheid (link) (November 2013)
  
  The relationship between economic development and democracy is key in political economy. Many commentators have suggested that economic growth increases support for democracy. One proposed mechanism is that modernization, by reducing the demand for low-skilled labor, increases the willingness of elites, particularly in agriculture, to extend the franchise. I use subnational variation in South Africa to test this mechanism. I employ national shocks to the mining sector’s demand for native black workers together with crosssectional variation in labor market competition induced by apartheid to estimate the effect of black labor scarcity on wages, capital intensity, and changes in partisan voting preferences. I find that reductions in the supply of foreign mine labor following the sudden withdrawal of workers from Malawi and Mozambique (and the increased demand for native black workers) increased mechanization on the mines and on farms competing with mines for labor. There is also suggestive evidence that these changes increased support for political reform in districts forced to modernize by the shocks. 


• Foreclosure Contagion: Measurement and Mechanisms (link) (with David Munroe), December 2013
  
  In this paper we ask whether foreclosures are contagious: does a completed foreclosure cause neighboring foreclosure filings? We estimate this relationship using administrative data on home foreclosures and sales in Cook County, IL, and instrument a completed foreclosure using random assignment of chancery-court judges. We find that a completed foreclosure causes between 0.5 and 0.7 additional filings within 0.1 miles, an effect that persists for several years. We interpret our results as evidence that contagion is driven by borrowers (rather than lenders). Moreover, contagion is not driven by borrowers in negative equity, but by borrowers learning from neighboring foreclosures. We also find that foreclosure disrupts local housing markets, increasing sales of neighboring lower-quality properties. 


• Valuing Institutions: A Measure of the Bond Market’s Views of Term Limits in Developing Countries (link) (with Sébastien Turban.), April 2013
  
  We study the effect of changes to political institutions on the perception of country risk. In particular we consider the impact of information about a change in executive term limits on a country’s bond spreads over 101 events in seven emerging markets. We uncover an interesting asymmetry. Investors respond significantly to news about restrictions on the length or number of terms an executive leader can serve, leading to lower country risk spreads over US Treasuries. The one day abnormal returns following news about a restriction of term limits is 2 percentage points below the prediction. Over ten days, the cumulative abnormal return is 5 percentage points. Both numbers are statistically significant. On the other hand, the response to an extension of executive terms in office is not significant in the long run. The result is robust to a non-parametric test. We find a more muted and less asymmetric response in private markets with a 2% abnormal return ten days after extensions, but no long-term effect of restrictions. The relation between investors’ responses and countries’ institutions shows tentative evidence that reactions are muted in better institutionalized countries, and stronger when the judiciary signals its independence from the executive. 


• Learning Within the State: a research agenda (link) (press coverage) (with Luke Jordan and Sébastien Turban), October 2013, Draft prepared for "Making Growth Happen: Implementing Policies for Competitive Industries" October 16-17, 2013, World Bank, Washington, DC.
  
  This paper studies incentives for improving policy systems, in the sense of improving the pace and quality of policy formulation and implementation given the exogenous constraints of political structure, institutional history and social capital. We first set out a general framework of state learning and policy change and then consider the comparative setting of China and India for an empirical comparison of this framework and model. We explore the implications of this framework for the analysis and implementation of development strategies. 


• The Subprime Mortgage Crisis: Underwriting Standards, Loan Modifications and Securitization (link), February 2010
  
  I wrote this survey to understand better how the US residential real estate market works, and in particular to understand the difficulties in resolving the foreclosure crisis. Others might also find it useful, but caution is advised. 

Completed

• Political Polarization and the Dynamics of Political Language: Evidence from 130 Years of Partisan Speech (link) with Jacob Jensen, Ethan Kaplan and Suresh Naidu (2012) Brookings Papers on Economic Activity, Fall 2012, pp 1-82
  
  We use the digitized Congressional Record and the Google N-gram corpus to quantitatively study the polarization of political discourse and the diffusion of political language from 1873 to 2000. We statistically identify highly partisan phrases from the Congressional Record, and then use these to impute partisanship and political polarization to the entire Google Books corpus. We find that while there has been an increase in the polarization of political discourse in the last 30 years, pre-2000 polarization is still low relative to the late 19th and most of the 20th century. We also find that polarization of political discourse predicts legislative gridlock, while polarization of Congressional language does not. Using a dynamic panel of phrases, we also find that polarized phrases increase in frequency in Google Books prior to increases in usage in Congress. Our evidence is consistent with an autonomous effect of elite political discourse on Congressional speech and legislative gridlock, but this effect is not driving the recent increase in Congressional polarization. 


• Global Public Goods and Investment Obstacles: A Survey of the Long-Term Institutional Perceptions (link) with Rachel Harvey, Patrick Bolton, Frederic Samama, and Li An (2013) Rotman International Journal of Pension Management (revise and resubmit)
  
  In an era of globalized governance, long-term investors are one of several actors who can provide global public goods. It is thus important to understand what factors constrain cross-border investments, and whether long-term investing is associated with public policy objectives. To begin answering these questions, funds traditionally associated with long-term investing were surveyed. Results indicate that foreign policy factors were most likely to decrease cross-border investment, and long-term investing was associated with intergenerational objectives. These findings emphasize the importance of creating a facilitative policy environment and suggest that long-term investors can contribute to the provision of global public goods. 

Research in Progress

• Labor Conflict and the Economic Incidence of Institutional Change: Evidence from South Africa  (with Suresh Naidu and Sébastien Turban)
• The Effects of Foreclosures on Crime  (with David Munroe)