COMPARATIVE ECONOMICS FIELD EXAM
January 10, 2007
Department of Economics
UC Berkeley
Answer all four questions. Each question is worth 25 points.
1. Different models have been put forward to try understand why institutions are so
different across transition countries, in particular why some have rule of law and others
not. What are the main models of that literature and their main features. Please give a
critical assessment of that literature.
2. Different approaches have been made to try to measure culture in different countries in
order to understand the impact of culture. Briefly explain the main approaches and assess
their strengths and weaknesses.
3. Hayek’s criticism on central planning is well known: When the dispersed information
has to be transmitted to a central planner who makes decisions on resource allocation, the
society cannot make efficient use of the information. On the other hand, one of the
central arguments of institutional economics such as Williamson is that of credible
commitment. In what way the idea of credible commitment differs from the idea of
Hayek as far as the use of information is concerned? Give a specific model to show your
argument. In what area is the argument of credible commitment most relevant in the
context of developing and transition economies?
4. Comparative economists often emphasize the importance of institutions in economic
development and transition. They argued for developing corporate governance in the
context of firms, courts in the context of contract enforcement, and the rule of law in the
context of constraining the government. We have witnessed in the past two decades the
great transformation of former socialist economies into market economies. What have
we learned from these experiences about the relationship between institutions and
economic performance? Please be specific about both theoretical arguments and
empirical evidence in each case. In case of a gap between theory and evidence, what are
the explanations put forward in the literature to reconcile them and to what extent they
contribute to comparative economics?
