Research

• Abstract: Just as councils and assemblies were key features of European political regimes for centuries, the Imperial Examination System (Keju) constituted the cornerstone of state institutions in the history of many East Asian monarchies. This book explores the implications of Keju for long-term political development. We document the origins of Keju in 6th to 7th century China utilizing data constructed from tome epitaphs. We trace the implicit selection criteria of the exam system over a millennium. At the cross-national level, with a panel of 112 historical states across Eurasia, we quantify the association of Keju with country-level political indicators against the backdrop of a worldwide convergence in political stability and divergence in institutions. This book makes two arguments regarding the link between Keju and long-run political development: (a) the adoption of Keju contributed to political stability, and (b) the emergence of Keju was a process, not a shock.

Abstract: A counterpart of what is known as “European exceptionalism”—political stability and institutional arrangement that enabled modern economic growth and political development—is a “Chinese anomaly.” This anomaly takes the form of a sharp contrast with pre-modern Europe: Chinese imperial rulers stayed in power longer than their European counterparts but this political stability was accompanied by a high level of institutional stasis. In this paper, we argue that a well-known Chinese institution, the civil service examination (CSE) system, contributed to China’s imperial longevity. We utilize detailed historical data on individual CSE performance to demonstrate the longevity-contributory mechanisms of CSE—constraining access to power by aristocrats and other wealth-holders. We argue that a key to unpacking the so-called “Chinese anomaly” is to understand the role of bureaucracy in political development in China and potentially in other regions.

Abstract: This paper presents a model of an executive administration that decides whether to mandate benefit-cost analysis (BCA) of newly proposed regulations. A regulator has private information about the social benefit of a new rule but may differ from the executive’s preferences for regulation. BCA, which provides a noisy signal of the rule’s social benefit, is most valuable when the executive is regulation-neutral. Extremely regulation-averse administrations may be harmed by BCA unless they can bias it. Our results are consistent with the use of BCA by U.S. presidential administrations since Reagan. 

Abstract: The authenticity of China’s economic data has long been questioned. We use a new statistical method, Benford’s test, to evaluate the data quality of the Chinese Industrial Census (CIC). We show that the method is effective in uncovering data irregularities. Based on predicted industrial output by variables that are less manipulatable, such as employment and electricity, we further demonstrate that firms of different ownership types display different behaviors in terms of the direction of data manipulation. We find no conclusive evidence of data manipulation by state-owned enterprises (SOEs), whereas private firms tend to under-report performance. 

Abstract: Previous research has shown that there exist “harbinger customers” who systematically purchase new products that fail (and are discontinued by retailers). This article extends this result in two ways. First, the findings document the existence of “harbinger zip codes.” If households in these zip codes adopt a new product, this is a signal that the new product will fail. Second, a series of comparisons reveal that households in harbinger zip codes make other decisions that differ from other households. The first comparison identifies harbinger zip codes using purchases from one retailer and then evaluates purchases at a different retailer. Households in harbinger zip codes purchase products from the second retailer that other households are less likely to purchase. The analysis next compares donations to congressional election candidates; households in harbinger zip codes donate to different candidates than households in neighboring zip codes, and they donate to candidates who are less likely to win. House prices in harbinger zip codes also increase at slower rates than in neighboring zip codes. Investigating households that change zip codes indicates that the harbinger zip code effect is more due to where customers choose to live, rather than households influencing their neighbors’ tendencies. 

Abstract: We use the ratio of growth in global military expenditures to gross domestic product (GDP) to capture ex-ante expectations of political instability and explore the relation between this measure and returns. In a standard global asset pricing framework with 44 countries, this measure helps to explain cross-country return differences. Furthermore, emerging countries have greater exposure to international political instability risk than developed countries. This partially explains the higher returns observed in emerging countries.