Institutions and Economic Growth.ppt

Institutions and Economic Growth 1st seminar: summary of the readings 1st seminar: some problems of readings (I) 1st seminar: some problems of readings (II) Theoretical starting point Transaction Cost Economics (TCE) North 1994: Economic Performance Through Time North’s definition of Institutions Assumptions of his theory Mental Models + Time ? Institutions Path dependence Conclusion Przeworski Limongi 1993 Przeworski Limongi 1993 Rodrik, Subramanian Trebbi 2004 F RST empirical test: Results Problems? Test the robustness of the results I Test the robustness of the results II Conclusion of RST empirical analysis The standard institutional model Sachs: Malaria matters Results * 1) Theoretical papers: North 1994 Przeworski and Limongi 1993 2) Empirical papers: Rodrik, Subramanian Trebbi 2004 Sachs 2003 Email: victor.lapuente@pol.gu.se Office: B532 Ideal Institutions are logically impossible Incumbents will always find ways of taking advantage of them The best (or “least bad”) institutions are those that limit as much as possible their incumbents E.g. constitutions, check and balances Miller co.: ‘toy’ models too abstract and few non-systematic empirical examples (e.g. anglo-saxon biased) Interesting insights for local governments: the professional bureaucrat could work e.g. city-manager cities strong mayor cities, both in US and across countries …but regarding national governments, not so clear: only some “Madisonian solutions” work US LA; 17th Britain 17th Poland, Hungary “Small efficient residual” sounds so nice on paper: Constitutional ban on deficit, McCain.. …but in practice (some US states, some EU members) North and Weingast: original, elegant,…but two different stories: on one hand, a description of political events; on the other, interests rates dropping, and no narratives of what is going on in the middle We know little of the millions of decisions by investors