@techreport{NBERw15944,
 title = "Theory, General Equilibrium and Political Economy in Development Economics",
 author = "Daron Acemoglu",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "15944",
 year = "2010",
 month = "April",
 URL = "http://www.nber.org/papers/w15944",
 abstract = {I 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.},
}