The Rise of Deep Determinants
Abstract: This paper investigates the intertemporal stability of the effect of deep determinants on economic and institutional development. Theoretically, the impact of historical or natural deep determinants should have been stable or slowly decreasing over time. Regressing institutional and economic outcomes on a broad range of deep determinants for each year since 1960, we show that both effect sizes and explained variance strongly increases over time. We conclude that the impact of deep determinants is recent and seems to contingent on the current global economic system.
