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What matters for growth in Europe? Institutions versus policies, quality versus instability

Berggren, Niclas; Bergh, Andreas LU and Bjornskov, Christian (2015) In Journal of Economic Policy Reform 18(1). p.69-88
Abstract
We study how the quality and instability of institutions and policies affect economic growth in 35 European countries. While stability entails valuable predictability, instability can reflect reforms that offer positive long-run consequences. We construct measures of quality and instability for a panel of countries for 1984-2009. Results suggest that the quality of policy is growth-promoting. Notably, this positive effect becomes larger the more unstable policies are. The findings suggest that for European countries, the benefits of policy flexibility - due to experimentation and learning or making rent seeking more difficult - dominate the costs of reduced predictability.
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
policies, Europe, reforms, institutional change, institutions, growth, instability, O11, B52, O43, O17, D80
in
Journal of Economic Policy Reform
volume
18
issue
1
pages
69 - 88
publisher
Taylor & Francis
external identifiers
  • wos:000349519700005
  • scopus:84924054144
ISSN
1748-7889
DOI
10.1080/17487870.2014.953159
language
English
LU publication?
yes
id
813e1954-132c-4b08-92c2-ab63bab9a325 (old id 5194575)
date added to LUP
2015-03-25 11:28:34
date last changed
2017-04-09 03:13:33
@article{813e1954-132c-4b08-92c2-ab63bab9a325,
  abstract     = {We study how the quality and instability of institutions and policies affect economic growth in 35 European countries. While stability entails valuable predictability, instability can reflect reforms that offer positive long-run consequences. We construct measures of quality and instability for a panel of countries for 1984-2009. Results suggest that the quality of policy is growth-promoting. Notably, this positive effect becomes larger the more unstable policies are. The findings suggest that for European countries, the benefits of policy flexibility - due to experimentation and learning or making rent seeking more difficult - dominate the costs of reduced predictability.},
  author       = {Berggren, Niclas and Bergh, Andreas and Bjornskov, Christian},
  issn         = {1748-7889},
  keyword      = {policies,Europe,reforms,institutional change,institutions,growth,instability,O11,B52,O43,O17,D80},
  language     = {eng},
  number       = {1},
  pages        = {69--88},
  publisher    = {Taylor & Francis},
  series       = {Journal of Economic Policy Reform},
  title        = {What matters for growth in Europe? Institutions versus policies, quality versus instability},
  url          = {http://dx.doi.org/10.1080/17487870.2014.953159},
  volume       = {18},
  year         = {2015},
}