Munich Personal RePEc Archive

Contract Intensive Money

Clague, Christopher and Keefer, Philip and Knack, Stephen and Olson, Mancur (1999): Contract Intensive Money. Published in: Journal of Economic Growth , Vol. 4, No. 2 (June 1999): pp. 185-212.


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This paper makes two contributions to the literature. First, it introduces a new, easily accessed and objective measure of the enforceability of contracts and the security of property rights. Second, it uses this measure to provide additional and more direct evidence about the importance of secure property and contract rights for economic growth and investment. In the analysis below, we briefly review the arguments that link the quality of third-party contract enforcement to growth and investment. We then show how the new measure, which we call “contract-intensive money” or CIM, relates to the subjective measures employed in the literature. We test empirically the proposition that this variable, as a measure of the security of contract and property rights, is positively related to income, growth and investment.

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