TY  - JOUR
AU  - Acemoglu,Daron
TI  - Theory, General Equilibrium and Political Economy in Development Economics
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15944
PY  - 2010
Y2  - April 2010
UR  - http://www.nber.org/papers/w15944
L1  - http://www.nber.org/papers/w15944.pdf
N1  - Author contact info:
Daron Acemoglu
Department of Economics
MIT, E52-380B
50 Memorial Drive
Cambridge, MA  02142-1347
Tel: 617/253-1927
Fax: 617/253-1330
E-Mail: daron@mit.edu
AB  - 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.
ER  -