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Title: Culture, Institutions and Growth
Citation Type: Miscellaneous
Publication Year: 2017
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Abstract: We develop a theoretical framework to investigate how culture and institutions determine long-term growth. Since culture and institutions are abstract and broad notions, we focus on the degree of individualism represented by culture, and the protection of property rights represented by institutions. This leads to an endogenous growth model in which culture, institutions and growth are jointly determined. The model admits multiple steady states and dynamic social equilibria through different combinations of culture and institutions in equilibrium. The multiplicity stems from a strategic complementarity between culture and institutions. Each social equilibrium consists of an economic equilibrium along with culture and institutions, and equilibrium selection depends entirely on self-fulfilling expectations. (i) We show that collectivist societies may fall into low-growth trap because they are more inclined toward poor protection of property rights. (ii) Societies near the growth trap may suffer from excess volatility arising from endogenous regime switching between weak and strong enforcement of property rights.
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Authors: Jeong, Minhyeon
Publisher: Washington University in St. Louis
Data Collections: IPUMS USA
Topics: Education, Labor Force and Occupational Structure, Other
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