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Wiley InterScience | |||||||||
  Economics & PoliticsVolume 14 Issue 1, Pages 41 - 63 Published Online: 7 Feb 2003 © 2010 Blackwell Publishing Ltd
Abstract | Full Text: PDF (Size: 194K) | Related Articles | Citation Tracking  Private Investment and Political Institutions Copyright 2002 Blackwell Publishers Ltd. ABSTRACTRecent research has demonstrated a negative link between macroeconomic and political uncertainty and levels of private investment across countries. This raises the question whether certain types of government institutions might help reduce this uncertainty. North and Weingast (1989) propose that political institutions characterized by checks and balances can have beneficial effects on investment by allowing governments to credibly commit not to engage in ex post opportunism with respect to investors. In this paper I develop and test a modified version of their hypothesis, suggesting that checks and balances, on average, improve possibilities for commitment, but that they are not a necessary condition for doing so. Results of heteroskedastic regression and quantile regression estimates strongly support this proposition. | 
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