Nathan Nunn, Raul Sanchez de la Sierra, 25 June 2017

Beliefs about origins, life after death, and rituals that activate supernatural processes to help people navigate life, despite being almost certainly incorrect, are common in developing countries. This column examines the role of ‘magical’ beliefs in warfare in the context of the Democratic Republic of the Congo. Belief in a spell that offers protection from bullets helped villagers liberate their village, and others in the area, from militias, providing an example of how the ‘right’ amount of ‘wrong’ beliefs can achieve a socially efficient outcome.

Ravi Kanbur, 25 June 2017

Political economy discourses in areas such as the nature of market failure, the case for government intervention on grounds of efficiency and equity, and the interplay between economic and political forces have run for generations. This column provides an overview of the life of Nobel Prize-winning economist W Arthur Lewis, who was a critic of laissez-faire economic policies, but who also acted as a check on extreme statist interventions, arguing against heavy state subsidy to industry on purely economic grounds.

Almut Balleer, Nikolay Hristov, Dominik Menno, 24 June 2017

Research into the aggregate effects of financial frictions in the economy generally assume that they do not affect whether (and which) firms adjust prices, something this column argues that should be taken into account. In particular, financial frictions change the composition of firms that reset prices and cause the degree of nominal price rigidity to vary over the business cycle, which has important consequences for how inflation and output respond to aggregate shocks.

Mark Gradstein, Marc Klemp, 23 June 2017

A large literature has argued that natural resources have a negative effect on economic development. The Brazilian data used in this column fail to confirm these findings. Economic activity, as measured using night-time light data, increases more during periods of rising oil prices in localities with better access to oil.  Oil revenue windfalls accruing to oil-rich locations and spillovers to adjacent locations drive this effect. 

Claudia Biancotti, Riccardo Cristadoro, Sabina Di Giuliomaria, Antonino Fazio, Giovanna Partipilo, 23 June 2017

Cybersecurity is becoming a vital concern for the functioning of a modern economy. This column argues that the threat of cyber attacks should be tackled economy-wide, with economic policies aimed at overcoming the externalities and information asymmetries that lead to suboptimal protection choices on the part of private agents. There is an urgent need for an improved understanding of microeconomic mechanisms in the cybersecurity market, and for reliable data upon which policy design can be based.

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