Discussion Paper Details

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Title: Institutions and Business Cycles

Author(s): Sumru G. Altug, Mustafa Emin and Bilin Neyapti

Publication Date: January 2012

Keyword(s): business cycles, institutions, nonparametric analysis and synchronization

Programme Area(s): International Macroeconomics

Abstract: This paper investigates the relationship between the main features of business cycles and the institutional and structural characteristics of countries of up to 62 industrial, emerging and formerly centrally planned economies from all continents. We derive the business cycle characteristics using the nonparametric Harding-Pagan approach. Our analysis reveals that institutional factors have significant associations with the duration and amplitude of business cycles. Examining the determinants of business cycle synchronization for the countries in our sample, we also demonstrate that the bilateral proximity of institutional and policy environments matters in addition to the gravity arguments, trade intensity and bilateral financial linkages used in earlier studies.

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Bibliographic Reference

Altug, S, Emin, M and Neyapti, B. 2012. 'Institutions and Business Cycles'. London, Centre for Economic Policy Research.