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Cultural Differences and Institutional Integration

Author

Listed:
  • Luigi Guiso
  • Helios Herrera
  • Massimo Morelli

Abstract

If citizens of different countries belonging to an economic union adhere to different and deeply rooted cultural norms, when these countries interact their leaders may find it impossible to agree on efficient policies, especially in hard times. Political leaders’ actions are bound to express policies that do not violate these norms. This paper provides a simple positive theory and a compelling case study of the importance of cultural clashes when economies integrate, as well as a normative argument about the desirability of institutional integration. Namely, we argue that a political union, with a common institutions and enforcement of rules, is a solution which is most beneficial the greater is cultural diversity in an economic union. JEL Classification: D72 Keywords: Cultural Norms, Institutions, Crisis Mismanagement.

Suggested Citation

  • Luigi Guiso & Helios Herrera & Massimo Morelli, 2014. "Cultural Differences and Institutional Integration," Working Papers 529, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  • Handle: RePEc:igi:igierp:529
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    References listed on IDEAS

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    Cited by:

    1. Alberto Batinti & Andrea Filippetti & Luca Andriani, 2017. "Why Does Social Capital Increase Government Performance? The Role of Local Elections across Italian Municipalities," Management Working Papers 13, Birkbeck Department of Management, revised Apr 2017.
    2. Giampaolo Lecce & Laura Ogliari & Tommaso Orlando, 2017. "Resistance to Institutions and Cultural Distance: Brigandage in Post-Unification Italy," Cowles Foundation Discussion Papers 2097, Cowles Foundation for Research in Economics, Yale University.
    3. repec:bla:ecinqu:v:55:y:2017:i:4:p:1813-1832 is not listed on IDEAS
    4. Adrian Chadi & Matthias Krapf, 2017. "The Protestant Fiscal Ethic: Religious Confession And Euro Skepticism In Germany," Economic Inquiry, Western Economic Association International, vol. 55(4), pages 1813-1832, October.
    5. Blesse, Sebastian & Boyer, Pierre C. & Heinemann, Friedrich & Janeba, Eckhard & Raj, Anasuya, 2017. "European Monetary Union reform preferences of French and German parliamentarians," ZEW Discussion Papers 17-059, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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