Institutional Change and Macroeconomic Performance in OECD Countries: Evidence from Subjective Well-Being Data

46 Pages Posted: 2 Dec 2015

See all articles by Heinz Welsch

Heinz Welsch

University of Oldenburg; ZenTra - Center for Transnational Studies

Jan Kühling

University of Oldenburg; ZenTra - Center for Transnational Studies

Date Written: November 15, 2015

Abstract

This paper explores the relationship between institutional change and macroeconomic performance in 30 member countries of the Organization for Economic Cooperation and Development (OECD). We use data on the subjective well-being (SWB) of more than 91,000 individuals in these countries to assess the well-being effects of national income growth, unemployment and inflation, and we employ the relationships found to construct an index of macroeconomic performance in terms of SWB. Applying the index to the period 1990-2009, we find that macroeconomic performance has improved in OECD overall and in the majority of countries, and that there has been a convergence of performance within the OECD. We then present evidence that OECD countries’ performance, as measured, is positively related to institutional change towards more trade openness and better institutional quality. We argue that both increased openness and improved institutional quality are correlates of economic and political integration and conclude that international integration has enhanced SWB by improving OECD countries’ national macroeconomic performance.

Keywords: institutional change, macroeconomic performance, international integration, subjective well-being, OECD

JEL Classification: F15, E61, I31

Suggested Citation

Welsch, Heinz and Kühling, Jan, Institutional Change and Macroeconomic Performance in OECD Countries: Evidence from Subjective Well-Being Data (November 15, 2015). ZenTra Working Paper in Transnational Studies No. 58 / 2015. Available at SSRN: https://ssrn.com/abstract=2698051

Heinz Welsch (Contact Author)

University of Oldenburg ( email )

Ammerländer Heerstraße 114-118
Oldenburg, D-26111
Germany

ZenTra - Center for Transnational Studies ( email )

Ammerländer Heerstraße 138
Oldenburg, 26131
Germany

Jan Kühling

University of Oldenburg

Ammerländer Heerstraße 114-118
Oldenburg, D-26111
Germany

ZenTra - Center for Transnational Studies ( email )

Ammerländer Heerstraße 138
Oldenburg, 26131
Germany

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