We use a stochastic frontier approach to study the effects of political and regulatory institutions on aggregate productivity in 39 countries from 1975 to 1990. We show that technical efficiency is positively related to policies supporting laissez-faire and political structures that promote policy stability. Moreover, models of technical efficiency incorporating both measures perform better than models including only one or the other. This suggests that economic performance depends not only on current policies but also on the confidence of market participants and outside investors that these policies will remain in place. (JEL O40, O30, H10, N40, D23) Copyright 2003, Oxford University Press.
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Article provided by Oxford University Press in its journal Economic Inquiry.
Volume (Year): 41 (2003) Issue (Month): 3 (July) Pages: 433-447 Download reference. The following formats are available: HTML
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Find related papers by JEL classification: O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General H10 - Public Economics - - Structure and Scope of Government - - - General N40 - Economic History - - Government, War, Law, and Regulation - - - General, International, or Comparative D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
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