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Institutional Change and Macroeconomic Performance in OECD Countries: Evidence from Subjective Well-Being Data

Author

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  • Heinz Welsch

    () (University of Oldenburg; ZenTra - Center for Transnational Studies)

  • Jan Kühling

    (University of Oldenburg; ZenTra - Center for Transnational Studies)

Abstract

This paper explores the relationship between institutional change and macroeconomic performance in 30 member countries of the Organization for Economic Cooperation and Development (OECD). We use data on the subjective well-being (SWB) of more than 91,000 individuals in these countries to assess the well-being effects of national income growth, unemployment and inflation, and we employ the relationships found to construct an index of macroeconomic performance in terms of SWB. Applying the index to the period 1990-2009, we find that macroeconomic performance has improved in OECD overall and in the majority of countries, and that there has been a convergence of performance within the OECD. We then present evidence that OECD countries’ performance, as measured, is positively related to institutional change towards more trade openness and better institutional quality. We argue that both increased openness and improved institutional quality are correlates of economic and political integration and conclude that international integration has enhanced SWB by improving OECD countries’ national macroeconomic performance.

Suggested Citation

  • Heinz Welsch & Jan Kühling, 2015. "Institutional Change and Macroeconomic Performance in OECD Countries: Evidence from Subjective Well-Being Data," ZenTra Working Papers in Transnational Studies 58 / 2015, ZenTra - Center for Transnational Studies, revised Dec 2015.
  • Handle: RePEc:zen:wpaper:58
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    More about this item

    Keywords

    institutional change; macroeconomic performance; international integration; subjective well-being; OECD;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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