What matters for growth in Europe? Institutions versus policies, quality versus instability
Author
Summary, in English
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.
Department/s
Publishing year
2015
Language
English
Pages
69-88
Publication/Series
Journal of Economic Policy Reform
Volume
18
Issue
1
Document type
Journal article
Publisher
Taylor & Francis
Topic
- Economics
Keywords
- policies
- Europe
- reforms
- institutional change
- institutions
- growth
- instability
- O11
- B52
- O43
- O17
- D80
Status
Published
ISBN/ISSN/Other
- ISSN: 1748-7889