We study the e¤ects of the adoption of new agricultural technologies on structural transformation. To guide empirical work, we present a simple model where the e¤ect of agricultural productivity on industrial development depends on the factor bias of technical change. We test the predictions of the model by studying the introduction of genetically engineered soybean seeds in Brazil, which had heterogeneous e¤ects on agricultural productivity across areas with di¤erent soil and weather characteristics. We …nd that technical change in soy production was strongly labor saving and led to industrial growth, as predicted by the model.

We study credit allocation across firms and its real effects during China’s economic stimulus plan of 2009–2010. We match confidential loan-level data from the nineteen largest Chinese banks with firm-level data on manufacturing firms. We document that the stimulus-driven credit expansion disproportionately favored state-owned firms and firms with a lower average product of capital, reversing the process of capital reallocation toward private firms that characterized China’s high growth before 2008. We argue that implicit government guarantees for state-connected firms become more prominent during recessions and can explain this reversal. Received August 23, 2017; editorial decision November 15, 2018 by Editor Philip Strahan.

We exploit variation in the congestion of civil courts across Brazilian municipalities, together with a bankruptcy reform increasing secured creditors’ protection, to estimate the effect of enforcement on firm access to finance, investment, and size. We find that firms operating in municipalities with less congested courts experienced a larger increase in the use of secured loans, as well as a larger increase in investment and value of output in the years after the reform. To establish the direction of causality, we use an instrumental variable strategy that exploits Brazilian state laws on judicial organization, and focus on differences in court congestion across otherwise similar neighboring municipalities located across judicial district borders within the same state. The evidence indicates that differences in court enforcement affect the impact of financial reform on firm access to finance, investment, and size.

Does fiscal consolidation lead to social unrest? Using cross-country evidence for the period 1919 to 2008, we examine the extent to which societies become unstable after budget cuts. The results show a clear correlation between fiscal retrenchment and instability. Expenditure cuts are particularly potent in fueling protests; tax rises have only small and insignificant e↵ects. We test if the relationship simply reflects economic downturns, using a recently-developed IMF dataset on exogenous expenditure shocks, and conclude that this is not the case. While autocracies and democracies show broadly similar responses to budget cuts, countries with more constraints on the executive are less likely to see unrest after austerity measures. Growing media penetration does not strengthen the e↵ect of cut-backs on the level of unrest. We also find that austerity episodes that result in unrest lead to quick reversals of fiscal policy.⇤ Ponticelli: UPF (jacopo.ponticelli@upf.edu); Voth: ICREA/UPF and CREI (jvoth@crei.cat).

Does fiscal consolidation lead to social unrest? Using crosscountry evidence for the period 1919 to 2008, we examine the extent to which societies become unstable after budget cuts. The results show a clear correlation between fiscal retrenchment and instability. Expenditure cuts are particularly potent in fueling protests; tax rises have only small and insignificant e↵ects. We test if the relationship simply reflects economic downturns, using a recently-developed IMF dataset on exogenous expenditure shocks, and conclude that this is not the case. While autocracies and democracies show broadly similar responses to budget cuts, countries with more constraints on the executive are less likely to see unrest after austerity measures. Growing media penetration does not strengthen the e↵ect of cutbacks on the level of unrest. We also find that austerity episodes that result in unrest lead to quick reversals of fiscal policy.