Institutions, Restructuring, and Macroeconomic Performance

40 Pages Posted: 26 Jul 2000

See all articles by Ricardo J. Caballero

Ricardo J. Caballero

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Mohamad L. Hammour

Ecole Normale Superieure (ENS); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: January 11, 2000

Abstract

A growing body of new research has emphasized the macroeconomic consequences of transactional impediments in factor markets, and their role in the recurrent restructuring requirements of modern economies. We first review the function institutional arrangements play in facilitating transactions and explore the macroeconomic consequences of poor institutions. As an application, we discuss the lessons that can be learnt from observed changes in the nature of unemployment in Europe. We then analyze the effect the institutional environment can have on macroeconomic restructuring. In light of this framework, we revisit the question of the relationship between recessions and restructuring activity, and review the recent evidence of reduced restructuring following recessions. We also discuss corroborating evidence from "merger waves" in the restructuring of corporate assets.

JEL Classification: E0, E24, E32, E44, G32, G33, J50

Suggested Citation

Caballero, Ricardo J. and Hammour, Mohamad L., Institutions, Restructuring, and Macroeconomic Performance (January 11, 2000). MIT Dept. of Economics Working Paper No. 00-02. Available at SSRN: https://ssrn.com/abstract=223752 or http://dx.doi.org/10.2139/ssrn.223752

Ricardo J. Caballero (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Building E52-528
Cambridge, MA 02142
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617-253-0489 (Phone)
617-253-1330 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Mohamad L. Hammour

Ecole Normale Superieure (ENS) ( email )

48, Boulevard Jourdan
Ecole Normale Superieure
75014 Paris
France
+33 143 136 305 (Phone)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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