INSTAGLOB "Institutions and Globalization"

Nicola Gennaioli

Nicola Gennaioli
Principal Investigator

September 2015 - February 2021
Grant Agreement ID: 647782


Economists have recently shown that developed economies rely on proper institutions for securing property rights, resolving disputes, etc. Scholars have studied the consequences of alternative legal and political institutions, but much remains to be done. One important and unexplored territory concerns the analysis of how national institutions interact in the international arena. This proposal seeks to study this problem from two perspectives. First, how does the quality of a country s national institutions affect its gains from international integration? Second, how does international integration affect a country s institutional reform path? We address the first question by studying, both theoretically and empirically, the impact of nationalinstitutions on sovereign risk, where the latter is defined as the risk that a government unilaterally decides ex-post not to honor its financial obligations with foreigners. While the impact of national institutions on private capital flows has been studied, the role of   these same institutions on supporting government debt has so far received scant attention. As for the second question, we study the impact of political and financial integration on countries institutional reform. We model two different motivations towards institutional change in an integrated world: a) direct confrontation in wars and b) competition through world financial markets. The general thrust of these analyses is that institutional reform becomes a strategic variable in international competition, creating cross-country externalities that can shed light on observed episodes of institutional converge or divergence. We also consider the role of institutional harmonization in supporting economic integration.

Published Papers

  • Finance and the Preservation of Wealth (with A. Shleifer and R. Vishny), Quarterly Journal of Economics, forthcoming
  • Salience Theory of Judicial Decisions (with P. Bordalo and A. Shleifer), Journal of Legal Studies, forthcoming
  • Money Doctors (with A. Shleifer and R. Vishny), The Journal of Finance
  • Salience and Consumer Choice (with P. Bordalo and A. Shleifer), Journal of Political Economy, forthcoming
  • Sovereign Default, Domestic Banks, and Financial Institutions (with A. Martin and S. Rossi), The Journal of Finance, forthcoming
  • Human Capital and Regional Development (with R. La Porta, F. López-de-Silanes and A. Shleifer), Quarterly Journal of Economics, forthcoming
  • A Model of Shadow Banking (with A. Shleifer and R. Vishny), Journal of Finance, forthcoming
  • Neglected Risks, Financial Innovation, and Financial Fragility (with A. Shleifer and R. Vishny), Journal of Financial Economics, 104, 452-468, May 2012
  • Legal Evolution and contract Evolution under Imperfect Enforcement (N. Gennaioli and G. Ponzetto)
  • The Psychology of Neglected Risks (N. Gennaioli, A. Shleifer and R. Vishny) American Economic Review, Papers and Proceedings, 2015
  • Banks, Government Bonds and Default: What do the Data Say? (N. Gennaioli, A. Martin, and S.Rossi), revise and resubmit, The Journal of Finance
  • Growth in Regions (N. Gennaioli, R. La Porta, F. Lopez De Silanes, and A. Shleifer), Journal of Economic Growth
  • Finance and the Preservation of Wealth (N.Gennaioli, A. Shleifer and R. Vishny), Quarterly Journal of Economics
  • State Capacity and Military Conflict (N. Gennaioli, and H.J. Voth), Review of Economic Studies
erc logo

This project has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme.