This paper views the standard production function in macroeconomics as a reduced form and derives its properties from microfoundations.The shape of this production function is governed by the distribution of ideas.If that distribution is Pareto, then two results obtain: the global production function is Cobb-Douglas, and technical change in the long run is labor-augmenting.Kortum (1997) showed that Pareto distributions are necessary if search-based idea models are to exhibit steady-state growth.Here we show that this same assumption delivers the additional results about the shape of the production function and the direction of technical change.

This paper views the standard production function in macroeconomics as a reduced form and derives its properties from microfoundations. The shape of this production function is governed by the distribution of ideas. If that distribution is Pareto, then two results obtain: the global production function is Cobb-Douglas, and technical change in the long run is labor-augmenting. Kortum showed that Pareto distributions are necessary if search-based idea models are to exhibit steady-state growth. Here we show that this same assumption delivers the additional results about the shape of the production function and the direction of technical change

Economic growth within countries varies sharply across decades.This paper examines one explanation for these sustained shifts in growth-changes in the national leader.We use deaths of leaders while in office as a source of exogenous variation in leadership, and ask whether these plausibly exogenous leadership transitions are associated with shifts in country growth rates.We find robust evidence that leaders matter for growth.The results suggest that the effects of individual leaders are strongest in autocratic settings where there are fewer constraints on a leader's power.Leaders also appear to affect policy outcomes, particularly monetary policy.The results suggest that individual leaders can play crucial roles in shaping the growth of nations."There is no number two, three, or four . . .

Economic growth within countries varies sharply across decades. This paper examines one explanation for these sustained shifts in growth—changes in the national leader. We use deaths of leaders while in office as a source of exogenous variation in leadership, and ask whether these plausibly exogenous leadership transitions are associated with shifts in country growth rates. We find robust evidence that leaders matter for growth. The results suggest that the effects of individual leaders are strongest in autocratic settings where there are fewer constraints on a leader's power. Leaders also appear to affect policy outcomes, particularly monetary policy. The results suggest that individual leaders can play crucial roles in shaping the growth of nations.

This paper formalizes a widely discussed peer eect entitled 'acting white'. 'Acting White'is modeled as a two audience signaling quandary: signals that induce high wages can be signals that induce peer group rejection. Without peer eects, equilibria involve all ability types choosing dierent levels of education. 'Acting White'alters the equilibrium dramatically: the (possibly empty) set of lowest ability individuals and the set of highest ability individuals continue to reveal their type through investments in education; ability types in the middle interval pool on a common education level. Only those in the lower intervals are accepted by the group. The model's predictions …t many stylized facts in the anthropology and sociology literatures regarding social interactions among minority group members.

This paper formalizes a widely discussed peer effect titled “acting White.” “Acting White” is modeled as a two-audience signaling quandary: signals that induce high wages can be signals that induce peer group rejection. Without peer effects, equilibria involve all ability types choosing different levels of education. “Acting White” alters the equilibrium dramatically: the (possibly empty) set of lowest ability individuals and the set of highest ability individuals continue to reveal their type through investments in education; ability types in the middle interval pool on a common education level. Only those in the lower intervals are accepted by the group. The model's predictions fit many stylized facts in the anthropology and sociology literatures regarding social interactions among minority group members.