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Property Rights and Growth: a Matter of Extremes

By Joshua Kazdin

This text explores the impact of property rights on economic growth by analyzing pooled cross-section ratings of property rights in 120 countries across a 35 year period. Empirical results are couched within a theoretical model that incorporates institutions into a general production function, adding property rights as an idiosyncratic shock. A generalized multivariate regression controlling for capital investment, population growth, trade openness and a benchmark level for GDP exhibits a positive impact of property rights on growth. Additional results indicate that the magnitude of property rights’ impact varies across different stages of development with the most profound impact in the extremes, i.e. the most developed and least developed countries. The text concludes by investigating the impact of legal heritage on the effectiveness of property rights as a growth propellant.

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Advisor: Lori Leachman

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