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ECON-UA 323: ECONOMIC DEVELOPMENT

Final Exam, Fall 2021

Please type your answers to the final exam (and remember to include your name in your response. This exam will go live on Brightspace at 12:30PM Eastern, please turn in your responses also to Brightspace by 1:45 (or longer if you have a different arrangement with the Moses Center).

You should feel free to use any material you want to help you with your answer (including         liberal use of quoting or research online), but do not communicate with anyone about the exam during the exam.

Since you are typing your answers, we expect them to be at least spell checked. Ifyou are unclear about something just use your best judgement, although you should email if something is really confusing. As always, don’t spend too much time on the first question only to run out of    time for the last question.

Imagine that you are working in the Ministry of Labor. Your boss is interested in subsidizing food purchases, which is a common form of pro-poor transfers across the world. They have heardof Zahin Haque’s dissertation, which suggests a new mechanism for why food subsidies   may be a good idea. Knowing that you are a development economics expert, they are hoping for your reaction to the paper.

First, provide an “elevator pitch” of the paper: if you were on an elevator for 5 minutes (roughly a double-spaced page) with your boss and had to describe the paper, what would you say? Why, theoretically, does Zahin think that the Production Engel exists? What data does she use to show the pattern?

Then your boss has two additional questions

1)  There is no experiment or RCT in the paper, which means the pattern could be explained by other omitted factors. As we discussed in class, under-investment patterns may be driven by credit constraints. What evidence does Zahin provide to argue against credit    constraints? Do you think this is credible?

2)  In section 7.3, Figure 13, Zahin argues that the effect of a rice subsidy leads to a much bigger increase in “marketed crop value” than on “welfare.” Explain why this makes sense (that the effect on crop value is bigger than the effect on welfare). Zahin does not explain this clearly, so this is a hard question that you will have to think about. Don’t   ramble in your answer – if you asked her, she would be able to answer the question at  most a paragraph, so you should spend more time thinking and less time writing an       answer (though you should write something).

You should quote liberally from the paper, but we don’t just want you to regurgitate the paper back to us – your response should be coherent, not just a few paragraphs copied and pasted    together.

Good luck!