Formal Institutions and Economy Fluctuation:An Empirical Study from Forty-Nine Countries

• Main Authors: Meng-Szu Hsu, 許夢斯
• Other Authors: Chih-Pin Lin
• Format: Others
• Language: zh-TW
• Published: 2015
• Online Access: http://ndltd.ncl.edu.tw/handle/5qttb2

碩士 === 真理大學 === 企業管理學系碩士班 === 103 === Economic fluctuations cause inflation and unemployment, which in turn result in great pains in the society. Therefore, macroeconomists from Keynes to Krugman have all emphasized on how to mitigate business cycles. Among these macroeconomists, Keynesian have stressed that the government can strategically use fiscal and monetary policy to mitigate business cycles, while the New Classical scholars have argued that fiscal and monetary policies that are expected will not be effective. Based on institutional theory, this study uses data from forty-nine countries during eighteen years (from 1996 to 2013) and finds that the strength of formal institutions of a country are negatively related to its economic fluctuations, suggesting that increasing the strength of formal institutions, such as to strengthen the rule of law, to reduce corruption, and to enhance the efficiency of judicial systems, may decrease the economic fluctuations and social pains. Past research in institutional theory has focused on developing strong formal institutions to increase economic growth; this study further argues that it may also decrease economic fluctuations.