Institutions and economics

António Henriques, Nuno Palma, 10 December 2019

The decline of countries such as Castile and Portugal, which first benefited from access to the New World, relative to their followers, especially England and the Netherlands, is often attributed to the quality of the Iberian countries’ institutions at the time Atlantic trade opened. This column questions this narrative by comparing Iberian and English institutional quality over time, considering the frequency and nature of parliamentary meetings, the frequency and intensity of extraordinary taxation and coin debasement, and real interest spreads for public debt. It finds no evidence that the political institutions of Iberia were worse until at least 1650.

Andrés Rodríguez-Pose, Tobias Ketterer, 18 November 2019

Institutions are an important ingredient for economic growth. Using data from European regions for the period 1999-2013, this column shows that government quality matters for regional growth, and that relative improvements in the quality of government are a powerful driver of development. One-size-fits-all policies for lagging regions are not the solution. Government quality improvements are essential for low-growth regions, and in low-income regions, basic endowment shortages are still the main barrier to development. 

Hans-Werner Sinn, 25 October 2019

According to the public finance economist Agnar Sandmo, who passed away in August 2019, the ideal economist should be an ‘applied theorist’ who is always ‘concerned with the application of theory to specific issues of economic policy’. As this column written by a friend and colleague of long standing explains, Sandmo himself satisfied these criteria to the highest possible extent. He combined extraordinary theoretical skills with a profound sense of political relevance and the ability to communicate his knowledge in a way accessible to all.

Bernard Hoekman, Petros Mavroidis, 26 August 2019

In December 2019, the WTO Appellate Body will cease to operate unless the US stops blocking new appointments. This column argues that the Appellate Body should stick to the mandate that was agreed in 1995 and not overstep it, as requested by the US. At the same time, the WTO adjudication process should be reformed by increasing the use of economics in panel reports, by improving the quality of panellists and Appellate Body members, by reducing the politicisation of appointments, and by changing the modus operandi of dispute settlement. 

Christian Dippel, Michael Poyker, 06 August 2019

The first private prison in the US opened in 1984. Over the next three decades, the imprisoned population increased by 194% while the country’s overall population increased by only 36%. This column examines the relationship between these two events, asking whether the growth of the private prison industry contributed to climbing incarceration rates. It concludes that private prisons moderately increased sentence lengths but not the likelihood of conviction, and finds no evidence that private prisons directly influenced judges or exacerbated existing racial biases in the judicial system.

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