POSC 182 Lecture 6 2010

POSC 182 Lecture 6 2010 - POSC 182: Politics and Economic...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: POSC 182: Politics and Economic Policy Unit 1: Institutions Lecture 6: The Importance of Institutions for Growth January 15, 2010 Institutions Matter Four Hypotheses of Underlying Sources of Growth: Trade Geography Culture Income / Growth Institutions Trade Weak ? ? ? Causal Inference: Endogeneity Endogeneity is the Chicken and the Egg problem: Trade openness is endogenous with incomes The correlation between openness to trade and high incomes may be a result of high income countries wanting to be open to trade and maybe not trade openness causing high incomes. In order to not have the endogeneity problem, income level should not affect trade openness. To be confident that the correlation between openness and income is due to the causal effect of trade openness on income: Trade openness should be randomly applied to countries, regardless of their income. In other words, trade openness should be exogenous of income. Four Hypotheses of Underlying Sources of Growth Geography Culture Income / Growth Institutions Trade Endog Strong ?...
View Full Document

Page1 / 16

POSC 182 Lecture 6 2010 - POSC 182: Politics and Economic...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online