Below you may find a summary of my current research projects.
Please click on the links above to be directed to the different project
pages with more detailed information and an overview of recent
Complementarities between economic institutions and policies
receive increasing attention both by academics and policy makers
as they are at the heart of the institutional variety of developed
economies ("Varieties of Capitalisms") and of the failure of much of
the structural reforms agenda in Europe to deliver satisfying results.
The topic has been around in my research ever since the start of
my thesis as a particular helpful intellectual device to understand
institutional divergence despite similar (economic) initial
conditions (see my discussion of 40 years of economic dynamics
in the UK and Germany).
Recently, I have started to break the general topic down into two
areas, which, I think, are of particular importance:
Market imperfection and business cycle behaviour
Rigidities and market frictions both generate and amplify economic
shocks. This is an indirect result from the second-best theorem as
resources are not able to adjust in an optimal manner to the shock.
In addition, due to the sub-optimal nature of an economy's
resource allocation in the presence of rigidities, not all opportunities
of consumption and production smoothing may be taken up, hence
endogenous cycles may emerge (paper).
Given that some frictions are inherent to the market process (such
as search and matching frictions), a first-best allocation may
simply not exist. In such a situation, institutional and policy
complementarities may provide mechanisms to mitigate the
original market failure, such as in the case of intertemporal
smoothing by financial intermediaries. A tension may, however,
emerge between different policies/institutions that target opposing
aspects of a market failure: In such a situation, no stable
institutional equilibrium may exist (paper).
Institutions and economic development
Institutions are key to understanding economic development and
giving policy advice to developing economies. While we have by
now a general overview of the most damaging hurdles for
economic growth, many countries have closely followed advice
given by international organisations (or so they thought) and still
not managed to create a long-lasting, self-sustained growth path.
That is the reason why I have been active in supporting efforts for a
new database on institutional indicators to be updated and further
developed in order to get a more detailed view on some of the main
economic growth mechanisms and their institutional prerequisites.
Again, institutional complementarities seem to be a key element of
the story of slow and uneven reform process. Political economy
considerations regarding the resistance to reform and strategies to
solve conflicts will be the main topic of my book in this area.