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Do Institutions and Culture Matter for Business Cycles?

  • Sumru Altug

    ()

    (Koc University and CEPR)

  • Fabio Canova

    (EUI, ICREA-UPF, CREMED, CREI, and CEPR)

We examine the relationship between institutions, culture and cyclical fluctuations for a sample of 45 European, Middle Eastern and North African countries. Better governance is associated with shorter and less severe contractions and milder expansions. Certain cultural traits, such as lack of acceptance of power distance and individualism, are also linked business cycle features. Business cycle synchronization is tightly related to similarities in the institutional environment. Mediterranean countries conform to these general tendencies.

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File URL: http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1217.pdf
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Paper provided by Koc University-TUSIAD Economic Research Forum in its series Koç University-TUSIAD Economic Research Forum Working Papers with number 1217.

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Length: 35 pages
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:koc:wpaper:1217
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