The final installment of my series on the empirical institutions literature. Quick summary of the prior posts:
- Part 1: cross-country studies of institutions are inherently flawed by lack of identification and ordinal institutional indexes treated as cardinal
- Part 2: instrumental variable approaches – settler mortality included – are flawed due to bad data and questions and more identification problems.
- Part 3: historical studies show that there is path dependence or a poverty trap, but not that institutions themselves are central to underdevelopment
You have to be very careful with what you conclude from the institutions literature or from my three posts. We are dealing with empirics here, so we are not able to make any definitive statements. There is a null hypothesis, and we either reject or fail to reject that null.
So what is that null hypothesis? For the institutions theory, as with any theory, the…
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Utopia, you are standing in it! 
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