Institutions, Technical Change and Macroeconomic Volatility, Crises and Growth: A Robust Causation

Sam Tang, Nicolaas Groenewold and Charles Leung
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Sam Tang: Department of Economics, The Chinese University of Hong Kong
Nicolaas Groenewold: UWA Business School, The University of Western Australia

No 03-21, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: This paper evaluates the role of technical change as a mediating channel through which the effects of institutions trickle down to affect macroeconomic volatility, crises and growth. Using different samples, estimation procedures and indicators of institutions and technical change, we find a robust positive causation for better institutional quality to accelerate technical change, which reduces macroeconomic volatility, mitigates crises and enhances long-run economic growth rate. This result is not due to weak data, simultaneity bias, measurement errors or misspecification and is remarkably robust to a large number of alternative specifications.

Pages: 59 pages
Date: 2003
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Citations: View citations in EconPapers (5)

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