Neyapti, B.2016-02-082016-02-0820130939-3625http://hdl.handle.net/11693/21052This paper proposes a formal framework to analyze the process of institutional evolution in relation with economic progress. Institutions have both formal (F) and informal (N) aspects that may exhibit varying processes of change. N is hypothesized to evolve with the level of capital stock, as in learning by doing, whereas F is chosen optimally by a government that maximizes output subject to social and political costs. F and N together define the production technology and affect the income level. Consistent with evidence, simulations of the model's solution reveal that optimum F exhibits a punctuated pattern.EnglishGrowthInstitutional evolutionPunctuated pathArticle10.1016/j.ecosys.2012.05.0041878-5433