Jang Park Neuroeconomist

ABOUT

Perception of social institutions is a strong indicator for economic growth. Governance is run
over GDP and GNI first by controlling for multicolinearity using a cooperative game theory
approach, the Shapley Value. Second, to control for endogeneity effects between regulation
quality and economic performance, years of colonization or most current foreign influence is
used as an instrumental variable to run governance perception over GDP and GNI constrained by
the four major classifications of legal origins: Common Law, Civil Law, Muslim Law, and Customary
Law. Overall, the world shows a positive relationship between governance quality and economic
performance; however, Common Law outperforms the rest of the systems both at the 2010 levels
and its trends from 1961 to 2011. Civil Law shows positive levels yet its trends are not significant
for GNI.

MADEIT CREDITS

  • FinanceClient

Economic Growth and Institutional Factors: an Instrumental Variables Approach

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