Explaining U.S. economic growth performance by macroeconomic governance, 1952–2018

Taner Akan (), Aycan Hepsağ () and Şeref Bozoklu
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Taner Akan: Istanbul University
Aycan Hepsağ: Istanbul University

Journal of Evolutionary Economics, 2022, vol. 32, issue 5, No 3, 1437-1465

Abstract: Abstract This paper hypothesizes that the structure of macroeconomic governance with its financial and non-financial dynamics is, among other things, a key determinant of economic performance, taking the case of the United States from 1952Q1 to 2018Q4. The paper tests its hypothesis by developing three modes of macroeconomic governance based on complementarities and a time-series model to be used for the empirical analysis of these modes and by using a linear and nonlinear Autoregressive Distributed Lag cointegration model. In so doing, the paper compares five periods between 1952Q1 and 2018Q4 using the same time-series model to illustrate how the changing structure of macroeconomic governance affects long-term economic performance over time. The paper reaches three conclusions. First, higher economic performance in 1952Q1–1968Q3 originates in, among other things, a systemic mode of macroeconomic governance. Second, lower economic performance in the three sub-periods between 1968Q4 and 2008Q2 is due to a fragmented mode of macroeconomic governance. Third, the sharp decline in economic performance in 2008Q3–2018Q4 originates in the outbreak and deepening of a structural trap due to long-run structural fragmentation.

Keywords: Complementarity; Growth; Macroeconomic governance (search for similar items in EconPapers)
JEL-codes: E12 E13 E14 O4 O51 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s00191-022-00800-8

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