Working Paper #2013-069
Do weak institutions prolong crises? On the identification, characteristics, and duration of declines during economic slumps
This paper defines economic slumps as a sequence of structural breaks
exhibiting a specific pattern. We identify 58 such episodes between 1950
and 2008 among a large sample of countries, and then examine the phases
of decline. In several countries declines last extremely long, and we
suggest several likely contributing factors. We find evidence of weak
institutions before the crisis hits and, interestingly, of positive
reforms thereafter. Strong institutions shorten the duration of crises,
ethnic cleavages do the reverse. However, the detrimental effects of
ethnic cleavages are not insurmountable: an interaction effect suggests
they can be offset by appropriate institutions.
- Keywords
-
- economic slumps
- crises
- institutions
- structural breaks
- duration analysis
- JEL codes
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- O43
- O11
- C41
- F43
Cite this as
APA 7th ed.Bluhm, R., de Crombrugghe, D., & Szirmai, A. (2013). Do weak institutions prolong crises? On the identification, characteristics, and duration of declines during economic slumps (UNU-MERIT Working Paper No. 2013-069). UNU-MERIT. https://unu-merit.nl/publications/working-papers/abstract/?id=5335