 Rebundling InstitutionsNo 2020-03, Graz Economics Papers from University of Graz, Department of Economics Abstract: This study investigates the joint effects of legal property rights and contracting institutions on economic development. In a two-step panel estimation procedure that uses data of 130 countries over the period 2005-2015, I find that the long-term income effects of legal property rights institutions depend on the quality of legal contracting institutions. This supports the hypothesis that the two different types of institutions provide interrelated incentives and constraints on economic decisions and productive activities. According to the estimates, the marginal effects of increasing executive constraints are significantly higher in countries with a legal system that efficiently enforces private contracts. Further decomposing the interaction effect for groups of countries with different quality combinations reveals that the first of the two types of legal institutions matters for the size and direction of the interaction effect. In poor countries with absent or bad legal institutions, reforms considering only one single type can backfire. Keywords: legal institutions; property rights; contracting; interrelated incentives; joint effects; economic development (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:grz:wpaper:2020-03 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in Graz Economics Papers from University of Graz, Department of Economics University of Graz, Universitaetsstr. 15/F4, 8010 Graz, Austria. Contact information at EDIRC. |
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