TY - JOUR
T1 - Economic divergence and institutional change
T2 - Some observations on the convergence literature
AU - Skott, Peter
PY - 1999/7
Y1 - 1999/7
N2 - Poor economic performance in a country will often lead to changes in the domestic policies and institutions, political instability, or changes in international relations. Induced institutional change of this kind affects the interpretation of the empirical evidence on economic convergence: a divergent process may be stabilized by institutional and political intervention. Stabilization may result even if the effects of each intervention are stochastic and the expected value of the benefits from each reform is non-positive. Thus, the appearance of conditional convergence may carry no implications for 'the underlying parameters of technology and preferences.'
AB - Poor economic performance in a country will often lead to changes in the domestic policies and institutions, political instability, or changes in international relations. Induced institutional change of this kind affects the interpretation of the empirical evidence on economic convergence: a divergent process may be stabilized by institutional and political intervention. Stabilization may result even if the effects of each intervention are stochastic and the expected value of the benefits from each reform is non-positive. Thus, the appearance of conditional convergence may carry no implications for 'the underlying parameters of technology and preferences.'
KW - F40
KW - Institutional change
KW - O11
KW - O47
KW - Political instability
KW - St. Petersburg paradox
KW - β-Convergence
UR - http://www.scopus.com/inward/record.url?scp=0013098974&partnerID=8YFLogxK
U2 - 10.1016/s0167-2681(99)00034-7
DO - 10.1016/s0167-2681(99)00034-7
M3 - Journal article
AN - SCOPUS:0013098974
SN - 0167-2681
VL - 39
SP - 235
EP - 247
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
IS - 3
ER -