• MIT Department of Economics

    Robert M. Townsend, Elizabeth & James Killian Professor of Economics

    A theorist, macroeconomist, and development economist, Townsend analyzes the role and impact of economic organization and financial systems through applied general equilibrium models, contract theory and the use of micro data. He is known for his seminal work on costly state verification, the revelation principle, optimal multi-period contracts, decentralization of economies with private information, models of money with spatially separated agents, forecasting the forecasts of others and insurance and credit in developing countries. He is the author of Financial Structure and Economic Organization (1990),The Medieval Village Economy (1993), Households as Corporate Firms (2010) with Krislert SamphantharakFinancial Systems in Developing Economies (2011), Chronicles from the Field (2013) with Sombat Sakuntasathien and Rob Jordan;and numerous professional articles.

Featured Working Papers

  • "Economic Development and the Equilibrium Interaction of Financial Frictions." Benjamin Moll, Robert M. Townsend, Victor Zhorin. NBER Working Paper No. 19618, 2014. ABSTRACT PDF

    This paper argues that different micro financial underpinnings have potentially very different implications at both the macro and the micro level on large cross-country income differences. The authors develop a general equilibrium framework that encompasses different regimes of frictions, and compare the implications of two concrete frictions: limited commitment and moral hazard. The work also presents an economy with different frictions in different regions, and argues that such mixture regimes are different from simple convex combinations of the pure moral hazard and pure limited commitment regimes.

  • "Risk and Return in Village Economies."  Krislert Samphantharak and Robert M. Townsend. NBER Working Paper No. 19738, 2013. ABSTRACT PDF

    This paper studies the risk and return of household enterprise in developing economies.  Using monthly panel data from Thailand with active risk-sharing and kinship networks, the authors make predictions from two benchmarks: one with full risk-sharing and one comprised of households in isolation. This framework allows for the calculation of total risk in enterprise and enables the authors to compute the risk premiums for both aggregate and idiosyncratic components. 

Featured Publication

  • "Chronicles from the Field: The Townsend Thai Project." Robert M. Townsend, Sombat Sakunthasathien, and Rob Jordan. Boston, MA: MIT Press, April 2013. LINK

    Running since 1997, the Townsend Thai Project has tracked millions of observations about the economic activities of households and institutions in Thailand. The authors offer an account of the design and implementation of the survey and tell the story not only of the origins and operations of the project but also of the challenges and rewards that come from a search to understand the process of a country's economic development.The book explains the technical details of data collection and survey instruments but emphasizes the human side of the project. 


  • Consortium on Financial Systems and Poverty

    The Consortium oversees the development of a growing body of research that seeks to put financial services for the poor, with an emphasis on the impact of savings, second generation banking, and policy, on a firm empirical and theoretical foundation and serves as a reliable guide to effective action. It is composed of top-tier researchers across a variety of institutions who work to understand the impact of financial products, the macro and micro policies that are associated with financial access, and technological innovations in financial service delivery.

  • Townsend Thai Project

    The Townsend Thai Project brings together one of the most detailed and longest running panel datasets in the developing world and archived secondary data for researchers at universities around the world.

  • Mapping Financial Institutions in Emerging Markets

    This project utilizes data mining techniques, GIS, and an interactive database to evaluate the impact of technology on retail banking and consumer finance in Thailand. This public database provides access to valuable consumer information and offers visual representation of patterns in economic conditions,commercial and government bank locations,education, labor, and health.

Latest News

The Urban/Rural Divide is Less Divided Than You Think
Financial Access Initiative Blog
November 5, 2013

This blog post by Alicia Brindisi discusses Robert M. Townsend's recent paper, "Accounting for the Poor", and explores ideas related to the lifecycle and consumption needs of the urban and rural poor.  While rural poverty is a persistent problem in Thailand and in other developing countries, Brindisi suggests that it should be addressed within the context of urbanization in order to acknowledge the interconnectedness of rural and urban populations.

Infrastructure Spending in Thailand: Fast Train Coming
The Economist
October 14, 2013

This article explores planned large-scale infrastructure -- including high speed rail -- and stimulus spending in Thailand.  Opponents of the program have called for fiscal prudence and have questioned the amount of public debt it would require.  MIT Professor Robert M. Townsend points out, however, that average debt-to-asset ratios are low and have been decreasing since 2006, a fact which suggests that concerns about spending are overstated.