Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/57941 
Authors: 
Year of Publication: 
2012
Series/Report no.: 
Kiel Advanced Studies Working Papers No. 457
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
In this paper we emphasize the role of institutions in economic analysis. We describe and compare different institutional classifications systems, which is rarely done in the literature, and show how to operationalize institutional classification based on the subject category, as the most appropriate one. More than thirty established institutional indicators can be clustered into three homogenous groups of formal institutions: legal, political and economic, which capture to a large extent the complete formal institutional environment of a country. We compute the latent quality of legal, political and economic institutions with factor analysis for every country in the world and for every year, relative to the values of others. We propose aWorld Institutional Quality Ranking, through which we can follow whether a country is improving or worsening its relative institutional environment. The calculated latent institutional qualities can be especially useful in further panel data applications, and add to the usual practice of using simply one or another index of institutional quality to capture the institutional environment, so we make the Institutional Quality Database freely available online.
Document Type: 
Working Paper

Files in This Item:
File
Size
676.56 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.