Institutional Change and Institutional Persistence

43 Pages Posted: 15 Sep 2020

See all articles by Daron Acemoglu

Daron Acemoglu

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

Georgy Egorov

Northwestern University - Kellogg School of Management; NBER

Konstantin Sonin

University of Chicago - Harris School of Public Policy; Higher School of Economics; Centre for Economic Policy Research (CEPR)

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Date Written: September 14, 2020

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.

Keywords: con ict, constitutions, democracy, institutions, institutional change, persistence, stability

JEL Classification: P16, D72, D74, C73, N10, N40

Suggested Citation

Acemoglu, Daron and Egorov, Georgy and Sonin, Konstantin, Institutional Change and Institutional Persistence (September 14, 2020). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2020-127, Available at SSRN: https://ssrn.com/abstract=3692636 or http://dx.doi.org/10.2139/ssrn.3692636

Daron Acemoglu

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

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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Georgy Egorov

Northwestern University - Kellogg School of Management ( email )

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NBER ( email )

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Konstantin Sonin (Contact Author)

University of Chicago - Harris School of Public Policy ( email )

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Chicago, IL 60637
United States

Higher School of Economics ( email )

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Moscow, 119017
Russia

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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