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Modeling institutional evolution

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  • Neyapti, Bilin

Abstract

This paper proposes a formal framework to analyze the process of institutional evolution in relation with economic progress. Institutions have both formal (F) and informal (N) aspects that may exhibit varying processes of change. N is hypothesized to evolve with the level of capital stock, as in learning by doing, whereas F is chosen optimally by a government that maximizes output subject to social and political costs. F and N together define the production technology and affect the income level. Consistent with evidence, simulations of the model's solution reveal that optimum F exhibits a punctuated pattern.

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  • Neyapti, Bilin, 2013. "Modeling institutional evolution," Economic Systems, Elsevier, vol. 37(1), pages 1-16.
    • Handle: RePEc:eee:ecosys:v:37:y:2013:i:1:p:1-16
    DOI: 10.1016/j.ecosys.2012.05.004
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    Cited by:

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    5. Ramona Țigănașu, 2018. "An Overview Of The European Union Resilience Capacity: Scientific Limits And Methodological Aspects Related To Its Measurement," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 170-181, December.

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    More about this item

    Keywords

    Institutional evolution; Punctuated path; Growth;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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