Institutions

Question 1

What things do inclusive economic institutions enable?

Answer 1

Secure property rights, law and order, markets and state support for market, access to education and free entry of new business

Question 2

What are extractive economic institutions?

Answer 2

Institutions designed by politically powerful elites to extract resources from the rest of society (eg. Slave labour)

Question 3

What do inclusive economic institutions do?

Answer 3

Allow broader participation and places constraints and regulations on those in power

Question 4

2 examples of formal institutions?

Answer 4

Constitutions, laws etc

Question 5

3 examples of informal institutions?

Answer 5

Sanctions, taboos, customs, traditions etc

Question 6

2 examples of economic institutions and how they benefit society?

Answer 6

Property right protection - enables entrepreneurs control over an asset

Regulatory institutions - corrects market failure

Question 7

2 issues with measuring institutions?

Answer 7

Not numerical variables in most cases

Relatively new field of economics

Question 8

What are economic institution measures?

Answer 8

Measures of regulations and effectiveness (eg. Doing business indicator)

Question 9

What are political institution measures? (2)

Answer 9

Forms of governance (democracy/dictatorship)(left/right), voter turnouts

Question 10

What are social institution measures? (2)

Answer 10

Opinion surveys, corruption measures

Question 11

3 aspects of the doing business indicator?

Answer 11

Number of countries where you can start a business in less than 20 days
Time taken to start a business
Paid in minimum capital required to do so

Question 12

Advantage and disadvantage of political institution indicators?

Answer 12

A: simple - can use dummy variables

D: not always in-depth enough

Question 13

Advantage and disadvantage(2) of social institution indicators?

Answer 13

A: direct and genuine
D: subjective and costly, difficult to translate questions between languages

Question 14

3 statistical issues in studying institutions?

Answer 14

Often little data available
Some variables/values may be missing tf gaps
Lot of new variables being used but tf have only been measured in recent years

Question 15

How to deal with gaps in data?

Answer 15

Extrapolation and interpolation

Interpolation - average between known observations
Extrapolation - estimate fitted line as predicted time trend