External shocks, politics and private investment
研究发展中国家政治系统如何应对外部经济冲击，并影响私人投资。通过模型和实证发现，城市化水平会放大冲击对投资的负面影响，而政治权利则有助于改善私人投资行为。
The manner in which the political system responds to external economic shocks in developing countries is a key determinant of the private investment response. We look at a simple model of political-economic equilibrium to make this intuition more precise, and developed the idea of a ‘political transmission mechanism’. Even in the confines of this simple model, we find that ambiguities abound: domestic politics can magnify or dampen the effect of the external shock. In our empirical work, we find that a high level of urbanization magnifies the investment reduction in response to an external shock. This is consistent with the supposition that high levels of urbanization are conductive to distributive politics with pernicious economic effects. We also find that the provision of political rights is conductive to superior private investment behavior.