Institutions, Restructuring and Macroeconomic Performance

Ricardo Caballero () and Mohamad Hammour
Additional contact information
Mohamad Hammour: Paris, France, and Centre for Economic Policy Research

Chapter 9 in Advances in Macroeconomic Theory, 2001, pp 171-193 from Palgrave Macmillan

Abstract: Abstract The core mechanism that drives economic growth in modern market economies is the massive ongoing restructuring and factor reallocation by which new technologies replace the old. This process of Schumpeterian ‘creative destruction’ permeates major aspects of macroeconomic performance — not only long-run growth, but also economic fluctuations and the functioning of factor markets. At the microeconomic level, restructuring demands innumerable decisions to create or destroy production units. The efficiency of those decisions hinges on the existence of sound institutions that provide a proper transactional framework. Failure along this dimension can have dire macroeconomic consequences. By limiting the economy’s ability to tap new technological opportunities and adapt to a changing environment, institutional failure can result in dysfunctional factor markets, economic stagnation, and exposure to deep crises.

Keywords: Labour Market; NBER Working Paper; Creative Destruction; Supply Elasticity; Restructuring Process (search for similar items in EconPapers)
Date: 2001
References: Add references at CitEc
Citations: View citations in EconPapers (10)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Institutions, Restructuring and Macroeconomic Performance (2001)
Working Paper: Institutions, Restructuring, and Macroeconomic Performance (2000)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-0-333-99275-3_9

Ordering information: This item can be ordered from
http://www.palgrave.com/9780333992753

DOI: 10.1057/9780333992753_9

Access Statistics for this chapter

More chapters in International Economic Association Series from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().