Corruption and Growth Under Weak Identification

The goal of this paper is to revisit the influential work of Mauro [1995] focusing on the strength of his results under weak identification. He finds a negative impact of corruption on investment and economic growth that appears to be robust to endogeneity when using two-stage least squares (2SLS). Since the inception of Mauro [1995], much literature has focused on 2SLS methods revealing the dangers of estimation and thus inference under weak identification. We reproduce the original results of Mauro [1995] with a high level of confidence and show that the instrument used in the original work is in fact 'weak' as defined by Staiger and Stock [1997]. Thus we update the analysis using a test statistic robust to weak instruments. Our results suggest that under Mauro's original model there is a high probability that the parameters of interest are locally almost unidentified in multivariate specifications. To address this problem, we also investigate other instruments commonly used in the corruption literature and obtain similar results.

A Simple Statistical Test of Violation of the Weak Axiom of Cost Minimization

A problem with a practical application of Varian.s Weak Axiom of Cost Minimization is that an observed violation may be due to random variation in the output quantities produced by firms rather than due to inefficiency on the part of the firm. In this paper, unlike in Varian (1985), the output rather than the input quantities are treated as random and an alternative statistical test of the violation of WACM is proposed. We assume that there is no technical inefficiency and provide a test of the hypothesis that an observed violation of WACM is merely due to random variations in the output levels of the firms being compared.. We suggest an intuitive approach for specifying a value of the variance of the noise term that is needed for the test. The paper includes an illustrative example utilizing a data set relating to a number of U.S. airlines.

What Happens in the Links? Framing Judgment in Context

Scholars of Chaucer’s Canterbury Tales have focused much of their research on the interpretation of individual tales in the collection. The meaning behind these tales is clearly important to the work as a whole, as the Tales discuss grand themes that run throughout human life. The choice of themes and arguments in each pilgrim’s tale can also reflect back on the pilgrim’s own motivations and ideas. However, in searching for some greater meaning for Chaucer’s collection, it is important not to leave out the framework within which the tales exist. The links that join the tales to one another, arguably the portions of the piece that are the most original to Chaucer, do not always receive the same kind of attention that is focused on the most popular tales. In a work that is so complex, with its layered narration and interactions between tale and teller, the tales cannot possibly stand on their own, containing all of the meaning behind the work. The links have the potential to be particularly revealing in terms of how the audience should read the entire story of Chaucer’s Canterbury pilgrimage, because they ground the tales in specific circumstances.