On the Survival of Imperfect Institutions

14 Pages Posted: 20 Aug 2008

Date Written: December 1, 2006

Abstract

When social structures are stable and social systems yield expected and desirable results, there is relatively less demand for institutional economics than during times of change. Surge of interest in institutional analysis usually comes during times when countries contemplate basic reform. The 1980s and early 1990s were such a period. NIE offered a fresh way of thinking about economic organization and its broader social context and immediately caught the attention of reformers. Yet the original contributions rarely dealt explicitly with institutional policy. This paper is concerned with the lessons of NIE for major reform or institutional policy. I particularly emphasize opportunities and limits for reform that reflect the knowledge problem as well as political and social responses to reform. Social science has not developed a comprehensive theory of social systems; rather we have accumulated bits of useful insights, often without explicitly knowing in what circumstances the insights apply. The main purpose of this paper is to discuss the lessons of modern institutional theory for institutional reform.

Keywords: Institutional Reform, Social Technologies, Knowledge Problem, Political and Social Reaction

JEL Classification: D23, H1

Suggested Citation

Eggertsson, Thrainn, On the Survival of Imperfect Institutions (December 1, 2006). Revista de Analisis Economico, Vol. 21, No. 2, 2006. Available at SSRN: https://ssrn.com/abstract=1239102

Thrainn Eggertsson (Contact Author)

Institute of Economic Studies ( email )

Oddi
University of Iceland
IS-101 Reykjavik
Iceland

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