Learning the Wealth of Nations


  • Francisco J. Buera,

    1. Economics Dept., University of California, Los Angeles, 8283 Bunche Hall, Los Angeles, CA 90095, U.S.A. and NBER; fjbuera@econ.ucla.edu
    Search for more papers by this author
  • Alexander Monge-Naranjo,

    1. Dept. of Economics, Pennsylvania State University, 502 Kern Graduate Building, University Park, PA 16802, U.S.A.; aum26@psu.edu
    Search for more papers by this author
  • Giorgio E. Primiceri

    1. Dept. of Economics, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208, U.S.A., CEPR, and NBER; g-primiceri@northwestern.edu
    Search for more papers by this author
    • We would like to thank the editor, Graziella Bertocchi, V. V. Chari, Chad Jones, Ramon Marimon, Joel Mokyr, Juan Pablo Nicolini, Monika Piazzesi, Andrés Rodríguez-Clare, Martin Schneider, Ruben Segura, Neil Wallace, Tao Zha, four anonymous referees, and participants in many seminars and conferences. We are also grateful to Alonso Alfaro for excellent research assistance and to James Fearon for providing us with an updated series of the data on civil wars (Fearon and Laitin (2003)).


We study the evolution of market-oriented policies over time and across countries. We consider a model in which own and neighbors' past experiences influence policy choices through their effect on policymakers' beliefs. We estimate the model using a large panel of countries and find that it fits a large fraction of the policy choices observed in the postwar data, including the slow adoption of liberal policies. Our model also predicts that there would be reversals to state intervention if nowadays the world was hit by a shock of the size of the Great Depression.