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Working Paper 2008-021C

"Institutional Causes of Macroeconomic Volatility"
by Levon Barseghyan, and Riccardo DiCecio

We investigate the relation between the quality of institutions and macroeconomic volatility. Using instrumental variable regressions, we show that higher barriers to entry lead to higher volatility. In particular, a one standard deviation increase in entry costs increases the standard deviation of output growth by roughly 40% of its average value in our sample. To the contrary, property rights protection has no statistically significant effect on volatility.

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Category > Monetary Policy/Macroeconomics
Author > Riccardo DiCecio
Research Papers and Publications: JEL Code > O11
Research Papers and Publications: JEL Code > O17
Research Papers and Publications: JEL Code > O43