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Institutions, human capital, and economic Output volatility: A Case of Open Economies

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  • Mujahid, Hira
  • Alam, Shaista

Abstract

Nowadays, it is debated why some countries are facing great macroeconomic volatility and crises. The basic reasons for dreadful macroeconomic performance and volatility are due to poor quality of institutions and unnecessary government spending, high inflation, and mismanaged exchange rates. This study investigates the relationship between institutional quality, human capital, and volatility of economic output; and uses various indicators of institutional quality. The sample includes a panel of 140 open economies, subject to the availability of data covering the annual time period from 2002 to 2014. The results propose that greater institutional quality increases economic performance and reduces the output volatility in the economy.

Suggested Citation

  • Mujahid, Hira & Alam, Shaista, 2016. "Institutions, human capital, and economic Output volatility: A Case of Open Economies," MPRA Paper 113235, University Library of Munich, Germany, revised 2018.
    • Handle: RePEc:pra:mprapa:113235
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    More about this item

    Keywords

    Macroeconomic Volatility; Economic Performance; Quality of Institutions.;
    All these keywords.

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F10 - International Economics - - Trade - - - General

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