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Institutional Change and Institutional Persistence

Author

Listed:
  • Daron Acemoglu

    (Massachusetts Institute of Technology - Department of Economics; CEPR; NBER)

  • Georgy Egorov

    (Northwestern University - Kellogg School of Management; NBER)

  • Konstantin Sonin

    (University of Chicago - Harris School of Public Policy; Higher School of Economics; CEPR)

Abstract
In this essay, we provide a simple conceptual framework to elucidate the forces that lead to institutional persistence and change. Our framework is based on a dynamic game between different groups, who care both about current policies and institutions and future policies, which are themselves determined by current institutional choices, and clarifies the forces that lead to the most extreme form of institutional persistence (“institutional stasis†) and the potential drivers of institutional change. We further study the strategic stability of institutions, which arises when institutions persist because of fear of subsequent, less beneficial changes that would follow initial reforms. More importantly, we emphasize that, despite the popularity of ideas based on institutional stasis in the economics and political science literatures, most institutions are in a constant state of flux, but their trajectory may still be shaped by past institutional choices, thus exhibiting “path-dependent change†, so that initial conditions determine both the subsequent trajectories of institutions and how they respond to shocks. We conclude the essay by discussing how institutions can be designed to bolster stability, the relationship between social mobility and institutions, and the interplay between culture and institutions.

Suggested Citation

  • Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2020. "Institutional Change and Institutional Persistence," Working Papers 2020-127, Becker Friedman Institute for Research In Economics.
    • Handle: RePEc:bfi:wpaper:2020-127
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    File URL: https://repec.bfi.uchicago.edu/RePEc/pdfs/BFI_WP_2020127.pdf
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    References listed on IDEAS

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    Cited by:

    1. Georgy Egorov & Konstantin Sonin, 2024. "The Political Economics of Non-democracy," Journal of Economic Literature, American Economic Association, vol. 62(2), pages 594-636, June.
    2. Georgii Riabov & Aleh Tsyvinski, 2021. "Policy with stochastic hysteresis," Papers 2104.10225, arXiv.org.
    3. Glawe, Linda & Wagner, Helmut, 2021. "Convergence, divergence, or multiple steady states? New evidence on the institutional development within the European Union," Journal of Comparative Economics, Elsevier, vol. 49(3), pages 860-884.
    4. Hudik, Marek, 2021. "Push factors of endogenous institutional change," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 504-514.

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    More about this item

    Keywords

    Conflict; constitutions; democracy; institutions; institutional change; persistence; stability;
    All these keywords.

    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative

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