The “hierarchy of institutions” reconsidered : monetary policy and its effect on the rule of law in interwar Poland

Hartwell, Christopher A.

doi:10.1016/j.eeh.2018.03.001

Please use this identifier to cite or link to this item: https://doi.org/10.21256/zhaw-22544

Publication type:	Article in scientific journal
Type of review:	Peer review (publication)
Title:	The “hierarchy of institutions” reconsidered : monetary policy and its effect on the rule of law in interwar Poland
Authors:	Hartwell, Christopher A.
et. al:	No
DOI:	10.1016/j.eeh.2018.03.001 10.21256/zhaw-22544
Published in:	Explorations in Economic History
Volume(Issue):	68
Page(s):	37
Pages to:	70
Issue Date:	2018
Publisher / Ed. Institution:	Elsevier
ISSN:	0014-4983
Language:	English
Subjects:	Inflation; Institution; Monetary policy; Poland
Subject (DDC):	330: Economics
Abstract:	Traditional wisdom in economics holds that institutional change runs from political institutions to economic ones, with the distribution of political power affecting the creation of property rights and rule of law. This hierarchy of institutions has been observed in macroeconomic policy, where it has long been understood that there are political incentives for economic mismanagement, namely the creation of inflation. But are there longer-term effects of currency manipulation on the rule of law in a country? That is, does the hierarchy not always hold? This paper answers this question by focusing on a specific case of monetary instability, the newly-independent Second Polish Republic of 1918 to 1939. Using appropriate econometric techniques on a new database of historical data, I find that monetary profligacy correlates strongly with significantly lower levels of the rule of law. This result is robust to several tests and most specifications, including the use of a new variable for measuring access to the political system. The results suggest that monetary instability is a threat to political institutions in its own right, eroding the rule of law in addition to creating macroeconomic difficulties.
URI:	https://digitalcollection.zhaw.ch/handle/11475/22544
Fulltext version:	Published version
License (according to publishing contract):	CC BY-NC-ND 4.0: Attribution - Non commercial - No derivatives 4.0 International
Departement:	School of Management and Law
Organisational Unit:	International Management Institute (IMI)
Appears in collections:	Publikationen School of Management and Law

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Hartwell, C. A. (2018). The “hierarchy of institutions” reconsidered : monetary policy and its effect on the rule of law in interwar Poland. Explorations in Economic History, 68, 37–70. https://doi.org/10.1016/j.eeh.2018.03.001

Hartwell, C.A. (2018) ‘The “hierarchy of institutions” reconsidered : monetary policy and its effect on the rule of law in interwar Poland’, Explorations in Economic History, 68, pp. 37–70. Available at: https://doi.org/10.1016/j.eeh.2018.03.001.

C. A. Hartwell, “The “hierarchy of institutions” reconsidered : monetary policy and its effect on the rule of law in interwar Poland,” Explorations in Economic History, vol. 68, pp. 37–70, 2018, doi: 10.1016/j.eeh.2018.03.001.

HARTWELL, Christopher A., 2018. The “hierarchy of institutions” reconsidered : monetary policy and its effect on the rule of law in interwar Poland. Explorations in Economic History. 2018. Bd. 68, S. 37–70. DOI 10.1016/j.eeh.2018.03.001

Hartwell, Christopher A. 2018. “The “Hierarchy of Institutions” Reconsidered : Monetary Policy and Its Effect on the Rule of Law in Interwar Poland.” Explorations in Economic History 68: 37–70. https://doi.org/10.1016/j.eeh.2018.03.001.

Hartwell, Christopher A. “The “Hierarchy of Institutions” Reconsidered : Monetary Policy and Its Effect on the Rule of Law in Interwar Poland.” Explorations in Economic History, vol. 68, 2018, pp. 37–70, https://doi.org/10.1016/j.eeh.2018.03.001.