Politics and Productivity

Peter Klein and Hung Luu

Economic Inquiry, 2003, vol. 41, issue 3, 433-447

Abstract: We use a stochastic frontier approach to study the effects of political and regulatory institutions on aggregate productivity in 39 countries from 1975 to 1990. We show that technical efficiency is positively related to policies supporting laissez-faire and political structures that promote policy stability. Moreover, models of technical efficiency incorporating both measures perform better than models including only one or the other. This suggests that economic performance depends not only on current policies but also on the confidence of market participants and outside investors that these policies will remain in place. (JEL O40, O30, H10, N40, D23) Copyright 2003, Oxford University Press.

JEL-codes: D23 H10 N40 O30 O40 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (41)

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