A third implication is that analysts ought to acknowledge that institutions are not
distributionally-neutral, but actually benefit some actors at the expense of others.
Furthermore, institutions that facilitate credible commitments are generally viewed in a
positive normative light, as sources of a variety of desirable outcomes: high economic
growth
, legislative stability and predictability
, and peaceful resolutions of ethnic and
However, the analysis in this paper suggests that an ability to
make credible commitments does not always have beneficial results. Credibility often
facilitates overvaluation, which contributes to financial crisis, capital flight and low
growth. It is a mistake to assume that credible commitments always have beneficial
effects.
100
Knight 1992; Moe 2005. Most institutionalists take a functionalist view of institutions centered on their
impact on efficiency and welfare-maximization. For an example from currency policy, see Broz 2002.
101
Henisz 2000; North and Weingast 1989.
102
Weingast and Marshall 1988.
103
Fearon 1995 & 1998.
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