Essays on economic crises and institutions
Thesis (Ph.D.)--Massachusetts Institute of Technology, Dept. of Economics, 2002.
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| Format: | Thesis |
| Language: | eng |
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Massachusetts Institute of Technology
2005
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| Online Access: | http://hdl.handle.net/1721.1/8418 |
| _version_ | 1826202940548841472 |
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| author | Thaicharoen, Yunyong |
| author2 | Olivier J. Blanchard and Simon Johnson. |
| author_facet | Olivier J. Blanchard and Simon Johnson. Thaicharoen, Yunyong |
| author_sort | Thaicharoen, Yunyong |
| collection | MIT |
| description | Thesis (Ph.D.)--Massachusetts Institute of Technology, Dept. of Economics, 2002. |
| first_indexed | 2024-09-23T12:26:48Z |
| format | Thesis |
| id | mit-1721.1/8418 |
| institution | Massachusetts Institute of Technology |
| language | eng |
| last_indexed | 2024-09-23T12:26:48Z |
| publishDate | 2005 |
| publisher | Massachusetts Institute of Technology |
| record_format | dspace |
| spelling | mit-1721.1/84182019-04-11T07:14:20Z Essays on economic crises and institutions Thaicharoen, Yunyong Olivier J. Blanchard and Simon Johnson. Massachusetts Institute of Technology. Dept. of Economics. Massachusetts Institute of Technology. Dept. of Economics. Economics. Thesis (Ph.D.)--Massachusetts Institute of Technology, Dept. of Economics, 2002. Includes bibliographical references. Countries that have pursued distortionary macroeconomic policies, including high inflation, large budget deficits and misaligned exchange rates, appear to have suffered bigger exchange rate crises, more macroeconomic volatility and also grown more slowly during the postwar period. Does this reflect the causal effect of these macroeconomic policies on economic outcomes? One reason to suspect that the answer may be no is that countries pursuing poor macroeconomic policies also have weak "institutions," including political institutions that do not constrain politicians and political elites, ineffective enforcement of property rights for investors, widespread corruption, and a high degree of political instability. Two papers in this thesis document that countries that inherited more "extractive" institutions from their colonial past were more likely to experience high volatility and economic crises during the postwar period. More specifically, societies where European colonists faced high mortality rates more than 100 years ago are much more volatile and prone to crises. We interpret this relationship as due to the causal effect of institutions on economic outcomes: Europeans did not settle and were more likely to set up extractive institutions in areas where they faced high mortality. Once we control for the effect of institutions, macroeconomic policies appear to have only a minor impact on volatility and crises. This suggests that distortionary macroeconomic policies are more likely to be symptoms of underlying institutional problems rather than the main causes of economic volatility, and also that the effects of institutional differences on volatility do not appear to be primarily mediated by any of the standard macroeconomic variables. (cont.) Instead, it appears that weak institutions cause volatility through a number of microeconomic, as well as macroeconomic, channels. The third paper reports relevant findings from bond markets. There appears to be no higher cost of borrowing for emerging market borrowers if their bonds are easier to restructure in the case of default. Given our findings on institutions, we suggest that default is likely to remain a recurrent event in many countries, and suggest that bond issuers and lenders should consider bonds that are easier to restructure. by Yunyong Thaicharoen. Ph.D. 2005-08-23T20:02:00Z 2005-08-23T20:02:00Z 2002 2002 Thesis http://hdl.handle.net/1721.1/8418 50602325 eng M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. http://dspace.mit.edu/handle/1721.1/7582 172 p. 14413462 bytes 14413218 bytes application/pdf application/pdf application/pdf Massachusetts Institute of Technology |
| spellingShingle | Economics. Thaicharoen, Yunyong Essays on economic crises and institutions |
| title | Essays on economic crises and institutions |
| title_full | Essays on economic crises and institutions |
| title_fullStr | Essays on economic crises and institutions |
| title_full_unstemmed | Essays on economic crises and institutions |
| title_short | Essays on economic crises and institutions |
| title_sort | essays on economic crises and institutions |
| topic | Economics. |
| url | http://hdl.handle.net/1721.1/8418 |
| work_keys_str_mv | AT thaicharoenyunyong essaysoneconomiccrisesandinstitutions |