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Institutional convergence: exit or voice?

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  • Joshua C. Hall

    () (West Virginia University)

Abstract

Abstract There is a small but growing literature on the determinants of economic freedom. This paper contributes to this literature in two ways. First, it is empirically shown that β-convergence in economic freedom occurred from 1980 to 2010. Countries with low levels of economic freedom in 1980 “catch up” at a rate of 0.7 percent a year on average, ceteris paribus. Second, the structural characteristics that contribute to this institutional convergence are documented. Conditional convergence estimates suggest democratic institutions do not con- tribute to conditional convergence. Exitability, a variable that captures how easy it is for citizens to “vote with their feet” is related to the change in economic freedom from 1980 to 2010 in a statistically significant manner across all specifications. This provides some preliminary evidence as to the importance of “exit” versus “voice” with respect to the question of institutional change.

Suggested Citation

  • Joshua C. Hall, 2016. "Institutional convergence: exit or voice?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(4), pages 829-840, October.
  • Handle: RePEc:spr:jecfin:v:40:y:2016:i:4:d:10.1007_s12197-015-9345-3
    DOI: 10.1007/s12197-015-9345-3
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    Cited by:

    1. Joshua Hall & John Levendis, 2017. "The Efficient Corruption Hypothesis and the Dynamics between Economic Freedom, Corruption, and National Income," Working Papers 17-06, Department of Economics, West Virginia University.
    2. Joshua C. Hall, 2017. "A "Model" Model: McCloskey and the Craft of Economics," Working Papers 17-09, Department of Economics, West Virginia University.
    3. repec:jpe:journl:1416 is not listed on IDEAS
    4. repec:pal:compes:v:59:y:2017:i:3:d:10.1057_s41294-017-0028-2 is not listed on IDEAS
    5. Arye L. Hillman & Niklas Potrafke, 2016. "Economic Freedom and Religion: An Empirical Investigation," CESifo Working Paper Series 6017, CESifo Group Munich.
    6. Claudio Detotto & Bryan C. McCannon, 2017. "Economic freedom and public, non-market institutions: evidence from criminal prosecution," Economics of Governance, Springer, vol. 18(2), pages 107-128, May.
    7. repec:sae:pubfin:v:46:y:2018:i:2:p:249-275 is not listed on IDEAS
    8. repec:spr:anresc:v:60:y:2018:i:3:d:10.1007_s00168-016-0785-2 is not listed on IDEAS

    More about this item

    Keywords

    Convergence; Economic freedom; Institutional change; Democracy; Exit;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P1 - Economic Systems - - Capitalist Systems
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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