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Institutions of Conflict Management and Economic Growth in the European Union

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  • Schneider, Friedrich
  • Wagner, Alexander F

Abstract

We examine both benefits (production-enhancing cooperation) and costs (taxes and rent-seeking) of institutions of conflict management, like corporatism and trust, in the context of a simple growth model. Contrary to previous research, we predict a non-linear relationship between institutions and growth. The empirical evidence from a panel for the years 1961-95 shows that neo-corporatism and trust have each had independent positive effects on long-run growth in the EU. Under an increasing size of government, however, both institutions lead to a dominating negative rent-seeking effect. Copyright 2001 by WWZ and Helbing & Lichtenhahn Verlag AG

Suggested Citation

  • Schneider, Friedrich & Wagner, Alexander F, 2001. "Institutions of Conflict Management and Economic Growth in the European Union," Kyklos, Wiley Blackwell, vol. 54(4), pages 509-531.
  • Handle: RePEc:bla:kyklos:v:54:y:2001:i:4:p:509-31
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    Cited by:

    1. Friedrich Schneider & Alexander F. Wagner & Mathias Dufour, 2003. "Satisfaction not guaranteed-Institutions and satisfaction with democracy in Western Europe," Economics working papers 2003-03, Department of Economics, Johannes Kepler University Linz, Austria.
    2. Fritz Breuss, 2001. "Towards a Political Economy of Zero Budgeting in Austria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 28(1), pages 41-67, March.
    3. Paul Dragos Aligica & Vlad Tarko, 2014. "Crony Capitalism: Rent Seeking, Institutions and Ideology," Kyklos, Wiley Blackwell, vol. 67(2), pages 156-176, May.
    4. Slesman, Ly & Baharumshah, Ahmad Zubaidi & Ra'ees, Wahabuddin, 2015. "Institutional infrastructure and economic growth in member countries of the Organization of Islamic Cooperation (OIC)," Economic Modelling, Elsevier, vol. 51(C), pages 214-226.
    5. Christopher J. Coyne & Claudia R. Williamson, 2012. "Purpose – This paper seeks to analyze empirically the net effect of trade openness on “economic culture”, measured by indicators of trust, respect, level of self-determination, and obedience. Openness," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing, vol. 1(4), pages 22-49, April.
    6. Wagner, Alexander F. & Schneider, Friedrich & Halla, Martin, 2009. "The quality of institutions and satisfaction with democracy in Western Europe -- A panel analysis," European Journal of Political Economy, Elsevier, vol. 25(1), pages 30-41, March.

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