Dr Antonio Savoia - Institutional Change and Persistence: What does the long-run evidence tell us?
When:
—
Venue:
Online
We are pleased to announce the 1st Seminar Series on Governance, Institutions, and Sustainability” jointly hosted by the Centre for Political Economy and Institutional Studies and by the Birkbeck Responsible Business Centre, within the Birkbeck Business School.
In our rapidly evolving world, the intricate web connecting governance, institutions, and sustainability has become increasingly prominent. We invite scholars, researchers, and practitioners to enhance this very important debate and to join us in exploring the profound intertwining of these critical elements at our upcoming seminar series.
Abstract
There is a broad agreement that political and economic institutions matter for long-term development. Yet relatively little is known on how to acquire and reform such institutions, for which one needs to know how institutions change. This paper provides a systematic econometric investigation of long-run patterns of institutional change, offering panel time series evidence that allows for different forms of country-specific heterogeneity and cross-section dependence, from variables capturing the quality of four key political and economic institutions for over 200 years for 197 countries from the VDEM database. We focus on two core hypotheses: (i) institutions display inertia, hence measures are stationary and, if a shock occurs, it is reabsorbed after a while;(ii) political and economic institutions tend to co-evolve. The results offer four findings. First, we find that non-stationarity cannot be rejected for measures of the rule law, property rights, executive constraints and electoral democracy, implying that institutions change in the long run. Second, we find that economic and political institutions are cointegrated: there is a long-run relationship between the two. While in the short-run they can drift apart, this will be temporary because they tend to co-evolve. Third, the existence and nature of a long run relationship may be different for different types of institutions: evidence of cointegration is strong between the rule of law and measures capturing constraints on the executive and electoral democracy, less so when looking at property rights protection and political institutions. Finally, long-run causality runs mostly from political institutions to economic institutions.
Speaker
Dr Antonio Savoia (University of Manchester)
Hosting Institutes:
Centre for Political Economy and Institutional Studies (CPEIS), Birkbeck University of London; Birkbeck Responsible Business Centre (RBC)
Convenor/Organiser: Dr Luca Andriani
Contact name:
Luca Andriani