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Purpose
– The purpose of this paper is to empirically examine the role of institutions on the remittances–output growth volatility relationship.


Design/methodology/approach
– The data set of this paper is limited to 71 remittances recipient countries. In an attempt to deal with endogeneity issues, the paper adopts the use of system generalised method of moment (GMM).


Findings
– First, in consonance with earlier studies, the growth volatility reducing influence of remittances flows was established. Second, unlike the extant literature, the growth volatility reduction potential of remittances was found to be more pronounced in the presence of well-functioning institutions. Finally, the interaction of remittances with our six institutional quality measures showed that growth volatility reduced considerably with better institutions.


Practical implications
– In terms of policy, remittances recipient countries need to simultaneously pursue economic and governance reforms. Both of these will enhance the counter-cyclicality of remittances and possibly other capital flows.


Originality/value
– Substantial efforts have been devoted to investigating the impact of remittances on output growth volatility, while very little research attention has been devoted to analysing the impact of institutions on the remittances–output growth volatility nexus.

AbstractHow do leaders influence national-level economic outcomes? We address this question by considering how leadership turnover influences volatility in economic growth. In doing so, we theorize that leaders from mixed regimes will reduce economic volatility due to domestic political incentives to create stable economic outcomes. Furthermore, we decompose the influence of leaders in non-democratic regimes and argue that leaders in party-based authoritarian regimes will also reduce economic volatility. To test our hypotheses, we focus on the effect of leadership turnover due to natural leader death to control for issues of endogeneity. We find that leaders in mixed regimes reduce volatility more than leaders in autocratic and democratic regimes and that leaders in party-based authoritarian regimes reduce volatility more than those in military or monarchy-based regimes. We conclude by explaining the implications of our findings for the study of leaders in international politics and their impact on economic growth and development.

What accounts for the substantial variation in the temporal volatility of economic growth rates in democratic regimes? We claim that institutional differences between the majoritarian and proportional representation (PR) electoral systems explain why growth volatility is high in some democracies, but not others. Specifically, we suggest that unlike PR democracies, the pronounced career concerns of policymakers in majoritarian systems give them incentives to use their discretionary spending power to alter government spending levels sharply, which generates higher spending volatility in these countries. As a result, policymakers in majoritarian systems cannot credibly commit themselves to stabilizing spending levels. This causes uncertainty among economic actors about future spending levels and leads to unstable investment patterns that generate a higher volatility of growth rates in majoritarian democracies. Results from statistical models provide robust statistical support for our theoretical predictions.

What accounts for the substantial variation in the temporal volatility of economic growth rates in democratic regimes? We claim that institutional differences between the majoritarian and proportional representation (PR) electoral systems explain why growth volatility is high in some democracies, but not others. Specifically, we suggest that unlike PR democracies, the pronounced career concerns of policymakers in majoritarian systems give them incentives to use their discretionary spending power to alter government spending levels sharply, which generates higher spending volatility in these countries. As a result, policymakers in majoritarian systems cannot credibly commit themselves to stabilizing spending levels. This causes uncertainty among economic actors about future spending levels and leads to unstable investment patterns that generate a higher volatility of growth rates in majoritarian democracies. Results from statistical models provide robust statistical support for our theoretical predictions. [Reprinted by permission of Sage Publications Ltd., copyright, the International Political Science Association.]

The aim of the paper is to determine (endogenously) whether the volatility of the US output growth rate has changed since the late 1940s. By applying the discrete wavelet transform to the annualized quarter‐to‐quarter output growth series, we test the homogeneity of the variance on a scale‐by‐scale basis. A version of the Normalized and Centered Cumulative Sum of Squares test, adapted to wavelets, leads us to reject the null of constant variance in the two levels of decomposition of the highest resolution and to locate a single break in 1982. The economic implications are explored.