TY - JOUR
T1 - Private investment and political institutions
AU - Stasavage, David
PY - 2002
Y1 - 2002
N2 - Recent research has demonstrated a negative link between macroeconomic and political uncertainty and levels of private investment across countries. This raises the question whether certain types of government institutions might help reduce this uncertainty. North and Weingast (1989) propose that political institutions characterized by checks and balances can have beneficial effects on investment by allowing governments to credibly commit not to engage in ex post opportunism with respect to investors. In this paper 1 develop and test a modified version of their hypothesis, suggesting that checks and balances, on average, improve possibilities for commitment, but that they are not a necessary condition for doing so. Results of heteroskedastic regression and quantile regression estimates strongly support this proposition.
AB - Recent research has demonstrated a negative link between macroeconomic and political uncertainty and levels of private investment across countries. This raises the question whether certain types of government institutions might help reduce this uncertainty. North and Weingast (1989) propose that political institutions characterized by checks and balances can have beneficial effects on investment by allowing governments to credibly commit not to engage in ex post opportunism with respect to investors. In this paper 1 develop and test a modified version of their hypothesis, suggesting that checks and balances, on average, improve possibilities for commitment, but that they are not a necessary condition for doing so. Results of heteroskedastic regression and quantile regression estimates strongly support this proposition.
UR - http://www.scopus.com/inward/record.url?scp=0036187245&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0036187245&partnerID=8YFLogxK
U2 - 10.1111/1468-0343.00099
DO - 10.1111/1468-0343.00099
M3 - Article
AN - SCOPUS:0036187245
SN - 0954-1985
VL - 14
SP - 41
EP - 63
JO - Economics and Politics
JF - Economics and Politics
IS - 1
ER -