Institutional causes of macroeconomic volatility

Levon Barseghyan and Riccardo DiCecio

No 2008-021, Working Papers from Federal Reserve Bank of St. Louis

Abstract: In this paper we investigate the relation between the quality of institutions and macroeconomic volatility. Using instrumental variable regressions, we show that higher barriers to entry lead to higher volatility. In particular, a one standard deviation increase in entry costs increases the standard deviation of output growth by roughly 40% of its average value in our sample. To the contrary, property rights protection has no statistically significant effect on volatility.

Keywords: Economic development; Macroeconomics - Econometric models (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-mac
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DOI: 10.20955/wp.2008.021

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