Coordinated Market Economy

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MPIfG Discussion Paper 04/5

Varieties of Capitalism and Institutional Complementarities in the Macroeconomy An Empirical Analysis Peter A. Hall and Daniel W. Gingerich

Peter A. Hall is Krupp Foundation Professor of European Studies and the Director of the Minda de Gunzburg Center for European Studies at Harvard University. Daniel W. Gingerich is a Graduate Associate of the Weatherhead Center for International Affairs and a Ph. D. candidate in the Department of Government at Harvard University. Peter A. Hall Daniel W. Gingerich

Peter A. Hall and Daniel W. Gingerich Varieties of Capitalism and Institutional Complementarities in the Macroeconomy: An Empirical Analysis

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This question has been central to comparative political economy for many years. However, most answers to it focus on institutions in a single sphere of the political economy. In economics, there are large but separate literatures on labor and financial markets. One explores the impact of labor regulations, social regimes, and trade unions on growth or unemployment (Nickell 1997; OECD 1994; Calmfors/ Driffil 1988). The other considers the effects of accounting standards, the legal standing of owners or creditors, ownership patterns, and equity or bank-based finance on levels of investment or growth (Carlin/Mayer 1999a, 1999b; LaPorta et al. 1998a; Huang/Xu 1999; Mayer 1996). A similar separation is evident in political science. Although neocorporatism can be defined in broad terms (cf. Katzenstein 1985; Schmitter/Lehmbruch 1978), analyses of its economic impact usually focus on the organization of the trade union movement, considering its interaction mainly with the partisanship of governance (Cameron 1984; Alvarez et al. 1991; Garrett 1999).1 An entirely different literature examines the structure of financial systems (Verdier 2000; Cox 1986; Zysman 1984).2 However, there are good reasons to expect interaction effects among institutions across spheres of the political economy. In recent years, significant interaction effects have been found between monetary institutions and those governing
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