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Title:Modeling institutional evolution PDF Logo
Authors:Neyapti, Bilin
Issue Date:2010
Series/Report no.:TÜSİAD-Koç University Economic Research Forum working paper series 1012
Abstract:This paper proposes an original formal framework to analyze institutional evolution. Institutions have formal (F) and informal (N) aspects that may evolve at different paces, although eventually converging towards each other through an dynamic interactive process. N evolves with capital accumulation, as in learning by doing, and F is optimally chosen by the government who maximizes output given the social and political costs of changing F. As transaction-cost-reducing mechanisms, F and N together define the production technology and affect the income level. As consistent with the evidence, calibrations of the model reveal that optimum F exhibits a punctuated equilibra.
Subjects:institutional evolution
punctuated equilibria
growth
JEL:E02
O17
O43
Document Type:Working Paper
Appears in Collections:ERF Working Paper Series, TÜSİAD-Koç University Economic Research Forum (ERF)

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