Description

By what mechanisms does trust influence economic outcomes? Under what conditions do these mechanisms prevail? How do debates about trust help our understanding of the subprime crisis in the European Union? By integrating insights from Post-Keynesian, Austrian and new institutional economics, the central proposition of the analysis is that the presence or absence of institutional trust creates virtuous and vicious cycles in law-abiding, which critically influence the possibility for economic agents to have realistic long-term plans. In a low-trust environment the uncertainty surrounding the functioning of institutions leads to short-term decisions. Political business cycles, lax regulations on credit and boom-bust cycles are typical of such an environment. While empirical evidence from the EU largely supports these propositions, important exceptions are also identified and the conditions for the theory noted - including financial market influences, fashions in economic theory as well as political leadership

Institutional Trust and Economic Policy Lessons from the History of the Euro : Lessons from the History of the Euro 

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Hardback by Dóra Győrffy

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By what mechanisms does trust influence economic outcomes? Under what conditions do these mechanisms prevail? How do debates about trust... Read more

    Publisher: Central European University Press
    Publication Date: 30/03/2013
    ISBN13: 9786155225222, 978-6155225222
    ISBN10: 6155225222

    Number of Pages: 238

    Non Fiction , Business, Finance & Law

    Description

    By what mechanisms does trust influence economic outcomes? Under what conditions do these mechanisms prevail? How do debates about trust help our understanding of the subprime crisis in the European Union? By integrating insights from Post-Keynesian, Austrian and new institutional economics, the central proposition of the analysis is that the presence or absence of institutional trust creates virtuous and vicious cycles in law-abiding, which critically influence the possibility for economic agents to have realistic long-term plans. In a low-trust environment the uncertainty surrounding the functioning of institutions leads to short-term decisions. Political business cycles, lax regulations on credit and boom-bust cycles are typical of such an environment. While empirical evidence from the EU largely supports these propositions, important exceptions are also identified and the conditions for the theory noted - including financial market influences, fashions in economic theory as well as political leadership

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