2012

The Growth Effects of Institutional Instability

Reprint No. 2012:14

Author(s): Niclas Berggren, Andreas Bergh and Christian BjørnskovYear: 2012 Title: Journal of Institutional Economics Volume (No.): 8 (2) Pages: 187–224
Online article (restrictions may apply)


We study the effects of institutional instability on growth. Using principal components analysis, we construct measures of institutional quality and instability from the political risk index of the International Country Risk Guide. A panel-data analysis of 132 countries during 1984–2004 reveals that institutional quality, especially with regard to the legal system and the protection of property rights, is positively linked to growth. As for institutional instability, we find evidence of a positive relationship in rich countries but a negative link in poor countries, suggesting that instability may reduce problems of institutional sclerosis in the former and that instability primarily entails an increase in transactions costs and uncertainty in the latter.


Reference:
Berggren, Niclas, Andreas Bergh and Christian Bjørnskov (2012), "The Growth Effects of Institutional Instability". Journal of Institutional Economics 8(2), 187–224.

Niclas Berggren

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Ph: +46 8 665 4520
niclas.berggren@ifn.se

Andreas Bergh

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Mob: 070 779 0734
andreas.bergh@ifn.se

Christian Bjørnskov

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Ph: +45 87 16 48 19
Mob: +45 20 12 03 84
chbj@econ.au.dk

Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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