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Institutions, Technical Change and Macroeconomic Volatility, Crises and Growth: A Robust Causation

  • Sam Hak Kan Tang

    (Department of Economics, The Chinese University of Hong Kong)

  • Nicolaas Groenewold

    (UWA Business School, The University of Western Australia)

  • Charles Ka Yui Leung

    (Department of Economics, The Chinese University of Hong Kong)

This paper evaluates the role of technical change as a mediating channel through which the effects of institutions trickle down to affect macroeconomic volatility, crises and growth. Using different samples, estimation procedures and indicators of institutions and technical change, we find a robust positive causation for better institutional quality to accelerate technical change, which reduces macroeconomic volatility, mitigates crises and enhances long-run economic growth rate. This result is not due to weak data, simultaneity bias, measurement errors or misspecification and is remarkably robust to a large number of alternative specifications.

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Paper provided by The University of Western Australia, Department of Economics in its series Economics Discussion / Working Papers with number 03-21.

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Length: 59 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:uwa:wpaper:03-21
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