Institutions and economics

Stephen Broadberry, John Joseph Wallis, 05 July 2017

Most analysis of long-run economic performance abstracts from short-run fluctuations and seeks to explain improved performance through an increase in the rate of growth. Using data on annual rates of change of per capita income reaching back to the 13th century for some countries, this column show that improved long-run performance has actually occurred primarily through a decline in the rate and frequency of shrinking. Structural change, technological change, demographic change and the changing incidence of warfare offer at best a partial explanation; a full understanding requires a consideration of institutional change.

Neil Monnery, 30 June 2017

Post-war Hong Kong delivered one of the most dramatic improvements in living standards in history, a transformation regarded by Milton Friedman as an experiment in the potential impact of economic freedom on economic growth. This column assesses the contribution of one key official – finance minister Sir John Cowperthwaite – whose laissez-faire approach of ‘positive non-interventionism’, much admired by Friedman, underpinned that success. It also explores, 20 years on from the handover to China, whether a second stage of the Hong Kong economic experiment might be in progress, perhaps leading to faltering freedom and faltering growth.

Ravi Kanbur, 13 June 2017

With the World Bank now far from the only game in town in providing development finance, this column argues that it should focus on issues which are truly global in scope, but questions the suitability of the World Bank’s signature instrument, the sovereign loan. The international community does rely on the Word Bank for one global public good – global consensus building – but the current situation of veto power in the hands of a US government which does not acknowledge global public good issues, as evidenced by its withdrawal from the Paris accord, is potentially lethal for perceived and actual independence in consensus building.

Refet Gürkaynak, Cédric Tille, 28 April 2017

Are Dynamic Stochastic General Equilibrium (DSGE) models worthwhile? Some economists suggest not, due to their complex nature and disputable assumptions.  This column introduces a new eBook which provides an all-round evaluation of DSGE models, widely used by many central banks, by looking at their current and historical uses as well as their future position in economics.

Riccardo Crescenzi, Marco Di Cataldo, Andrés Rodríguez-Pose, 11 April 2017

Transport infrastructure investment is a cornerstone of growth-promoting strategies around the world. However, investment in new infrastructure is not always conducive to stronger economic performance. This column argues that the lack of positive economic returns may be due to institutional failures mitigating the growth effects of public capital expenditures. In contexts marked by weak and inefficient governments and widespread corruption, different types of road investments yield low or no economic returns.

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