nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2005‒12‒14
three papers chosen by
Karl Petrick
Leeds Metropolitan University

  1. Institutions and Development:A View from Below By Rohini Pande; Christopher Udry
  2. The Co-evolution of Institutions and Technology By Desiree Desierto
  3. Institution Building and Growth in Transition Economies By Thorsten Beck; Luc Laeven

  1. By: Rohini Pande (Economic Growth Center, Yale University); Christopher Udry (Economic Growth Center, Yale University)
    Abstract: In this paper we argue the case for greater exploitation of synergies between research on specific institutions based on micro-data and the big questions posed by the institutions and growth literature. To date, the macroeconomic literature on institutions and growth has largely relied on cross-country regression evidence. This has provided compelling evidence for a causal link between a cluster of ‘good’ institutions and more rapid long run growth. However, an inability to disentangle the effects of specific institutional channels on growth or to understand the impact of institutional change on growth will limit further progress using a cross-country empirical strategy. We suggest two research programs based on micro-data that have significant potential. The first uses policy-induced variation in specific institutions within countries to understand how these institutions influence economic activity. The second exploits the fact that the incentives provided by a given institutional context often vary with individuals’ economic and political status. This can help us better understand how institutional change arises in response to changing economic and demographic pressures.
    Keywords: Institutions, Growth, Cross-Country Regressions
    JEL: O11 O12 O17 P51
    Date: 2005–11
  2. By: Desiree Desierto
    Abstract: We propose a model of growth driven by the co-evolution of institutions and technology. To be consistent with Douglass North (1990, 1991, 1994), institutions are defined as a type of collective knowledge about a specific environment that can prescribe how to adapt general technology before the latter can be actually used. Institutions, then, are treated as a factor in the innovation process, and as such can be purposely accumulated. The simultaneous accumulation of institutions and technology are modeled as an evolutionary game whereby boundedly-rational .rms choose how much to allocate to ‘institutional spending’ vis-a-vis research expenditures, in anticipation of changes in monopoly pro.ts from technological innovation. Using Taylor and Jonker’s (1978) Replicator Dynamics to describe the evolution of such strategies, we are able to show how this transition process converges to the steady state model of Romer (1990).
    Keywords: endogenous growth, institutions, technological change
    JEL: O30 O33 O49 Z13
    Date: 2005–12
  3. By: Thorsten Beck (The World Bank); Luc Laeven (The World Bank and CEPR)
    Abstract: Drawing on the recent literature on economic institutions and the origins of economic development, the authors offer a political economy explanation of why institution building has varied so much across transition economies. They identify dependence on natural resources and the historical experience of these countries during socialism as major determinants of institution building during transition by influencing the political structure and process during the initial years. Their empirical analysis shows that countries that are more reliant on natural resources and spent a longer time under socialist governments are more likely to see former communists remain in power and to start the transition process with less open political systems, with negative repercussions for the development of market-compatible institutions. Using natural resource reliance and the years under socialism to extract the exogenous component of institution building, the authors also show the importance of institutions in explaining the variation in economic development and growth across transition economies during the first decade of transition.
    Keywords: Governance, Transition, Macroeconomics and growth
    Date: 2005–07–01

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