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Social trust, institutional and political constraints on the executive and deregulation of markets

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  • Leibrecht, Markus
  • Pitlik, Hans

Abstract

Social trust is frequently claimed to be conducive for economic reforms. Likewise, the scope of policy liberalization is influenced by the political power structure as manifested in institutional and political constraints on the executive (IPCE). However, social trust and IPCE are possibly intertwined in their effects on economic liberalization. This paper empirically explores the relationship between social trust, IPCE and the scope of economic deregulation as measured by the first difference in the regulation subindex of the Economic Freedom of the World index. The results provide evidence in favor of a positive association of social trust with deregulation and of a negative association between institutional or partisan veto-points and deregulation. Yet, according to our analysis IPCE are an obstacle for economic deregulation only in relatively low trusting environments and social trust unfolds a particular strength as driver of deregulation with increasing levels of IPCE.

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  • Leibrecht, Markus & Pitlik, Hans, 2015. "Social trust, institutional and political constraints on the executive and deregulation of markets," European Journal of Political Economy, Elsevier, vol. 39(C), pages 249-268.
    • Handle: RePEc:eee:poleco:v:39:y:2015:i:c:p:249-268
    DOI: 10.1016/j.ejpoleco.2015.06.002
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    Cited by:

    1. Ryan H. Murphy, 2021. "The Soft Stuff of Institutional Development: Culture, Cohesion, and Economic Freedom," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 36(Summer 20), pages 37-66.
    2. Markus Leibrecht & Johann Scharler, 2021. "Veto players, market discipline, and structural fiscal consolidations," Public Choice, Springer, vol. 188(3), pages 361-384, September.
    3. Asatryan, Zareh & Heinemann, Friedrich & Pitlik, Hans, 2017. "Reforming the public administration: The role of crisis and the power of bureaucracy," European Journal of Political Economy, Elsevier, vol. 48(C), pages 128-143.
    4. Rasmus Wiese & Richard Jong-A-Pin & Jakob de Haan, 2015. "Are expenditure cuts the only effective way to achieve successful fiscal adjustment," DNB Working Papers 477, Netherlands Central Bank, Research Department.
    5. Megan V. Teague & Virgil Henry Storr & Rosemarie Fike, 2020. "Economic freedom and materialism: an empirical analysis," Constitutional Political Economy, Springer, vol. 31(1), pages 1-44, March.
    6. Li, Jingheng & Xi, Tianyang & Yao, Yang, 2020. "Empowering knowledge: Political leaders, education, and economic liberalization," European Journal of Political Economy, Elsevier, vol. 61(C).
    7. Hans Pitlik & Martin Rode, 2021. "Radical Distrust: Are Economic Policy Attitudes Tempered by Social Trust?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 158(2), pages 485-506, December.
    8. Hans Pitlik, 2017. "Österreich 2025 – Verwaltungsreform zwischen Effizienzstreben und Reformwiderständen. Ein Überblick," WIFO Monatsberichte (monthly reports), WIFO, vol. 90(3), pages 205-217, March.
    9. Albanese, Giuseppe & Cioffi, Marika & Tommasino, Pietro, 2019. "Legislators' behaviour and electoral rules: Evidence from an Italian reform," European Journal of Political Economy, Elsevier, vol. 59(C), pages 423-444.
    10. Robert Gillanders & Olga Neselevska, 2018. "Public Sector Corruption and Trust in the Private Sector," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(8), pages 1288-1317, November.
    11. Andreas Bergh & Christian Bjørnskov, 2020. "Does Big Government Hurt Growth Less In High‐Trust Countries?," Contemporary Economic Policy, Western Economic Association International, vol. 38(4), pages 643-658, October.
    12. Wiese, Rasmus & Jong-A-Pin, Richard & de Haan, Jakob, 2018. "Can successful fiscal adjustments only be achieved by spending cuts?," European Journal of Political Economy, Elsevier, vol. 54(C), pages 145-166.
    13. Niclas Berggren & Christian Bjørnskov, 2017. "The Market‐Promoting and Market‐Preserving Role of Social Trust in Reforms of Policies and Institutions," Southern Economic Journal, John Wiley & Sons, vol. 84(1), pages 3-25, July.
    14. Danko Tarabar & Javier E. Portillo, 2021. "Does Culture Affect Electoral Outcomes? Evidence From Transition Countries," Contemporary Economic Policy, Western Economic Association International, vol. 39(1), pages 141-155, January.
    15. Bergh, Andreas & Bjørnskov, Christian, 2016. "Burying the Bumblebee Once and for All:," Working Paper Series 1119, Research Institute of Industrial Economics.
    16. Arif, Imran & Hall, Joshua C., 2019. "International flows of people and institutional change," European Journal of Political Economy, Elsevier, vol. 58(C), pages 276-288.
    17. Berggren, Niclas & Bjørnskov, Christian, 2023. "Does globalization suppress social trust?," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 443-458.

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    More about this item

    Keywords

    Social trust; Economic deregulation; Political constraints; Veto-players; Veto-points;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • P11 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Planning, Coordination, and Reform

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