The Common Law and Economic Growth: Hayek Might Be Right

By P. Mahoney. The Journal of Legal Studies, 2001

512 citations recorded by the source corpus.

Recent finance scholarship finds that countries with legal systems based on the common law have more developed financial markets than civil‐law countries. The present paper argues that finance is not the sole, or principal, channel through which legal origin affects growth. Instead, following Hayek, I focus on the common law’s association with limited government. I present evidence that common‐law countries experienced faster economic growth than civil‐law countries during the period 1960–92 and then present instrumental variables results that suggest that the common law produces faster growth through greater security of property and contract rights.

Subfields: Accounting, Information Systems, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/d1cdd367c4cb2ee18488312faa4c1591dee12f52

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Citations in the corpus

Legal Theories of Financial Development (2001, background): “The Crown attempted to reassert feudal prerogatives and sell monopolies to raise revenues.”
A companion to the history of economic thought (2003, background): “Recent work in economic development is taking up the task of testing Hayek’s claims about common-law traditions and the rule of law (Mahoney, 2001).”
Law and Firms' Access to Finance (2004, unknown): “Over time, state dominance of the judiciary produced legal traditions that focus more on the power of the state and less on the rights of individual investors, with negative ramifications for financial development (Mahoney 2001).”
Does economic freedom cause prosperity? An IV approach (2009, result): “These results are consistent with Mahoney (2001 ) a nd La Porta et al. ( 2008) who contend that legal origin influences prosperity directly through channels others than the variables that proxy for institutions.”
Shareholder Protection and Stock Market Development: An Empirical Test of the Legal Origins Hypothesis (2009, background): “The two channels can be seen as complementary, as, for example, implied by Hayek’s analysis of the differences between the common law and civil law (Hayek, 1960, 1980; Mahoney, 2001).”
Labor Regulation, Corporate Governance, and Legal Origin: A Case of Institutional Complementarity? (2007, background): “Mahoney (2001), on the other hand, does find evidence of a relationship between common law origins and faster rates of real growth in GDP per head in a sample of developed and developing economies between the 1960s and the 1990s.”
Competition Policy with Optimally Differentiated Rules Instead of 'Per se Rules vs. Rule of Reason' (2006, unknown): “discretionary approach (e.g. Brunetti/Kisunko/Weber 1998; Mahoney 2001); see generally on the”
Public and Private Enforcement of Securities Laws: Resource-Based Evidence (2009, unknown): “Mahoney (2001). Policymakers then find it valuable to protect these developed financial markets with stronger regulators.”
The Global History of Corporate Governance: An Introduction (2005, unknown): “See Hayek (1960), Mahoney (2001), and La Porta et al. (2004).”