Varieties of Capitalism and Institutional Complementarities in the Macroeconomy

Peter A. Hall and Daniel W. Gingerich

No 04/5, MPIfG Discussion Paper from Max Planck Institute for the Study of Societies

Abstract: Using aggregate analysis, this paper examines the core contentions of the "varieties of capitalism" perspective on comparative capitalism. We construct a coordination index to assess whether the institutional features of liberal and coordinated market economies conform to the predictions of the theory. We test the contention that institutional complementarities occur across sub-spheres of the macroeconomy by examining the correspondence of institutions across sub-spheres and estimating the impact of complementarities in labor relations and corporate governance on rates of growth. To assess the stability of the institutional features central to the theory, we assess the dynamics of institutional change in recent years. The evidence suggests that there are powerful interaction effects among institutions across sub-spheres of the political economy that must be considered if the economic impact of institutional change in any one sphere is to be accurately assessed.

Date: 2004
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Citations: View citations in EconPapers (71)

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