Methodology of Institutional Analysis of Economics Problems

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Abstract

This paper argues methodology of analyzing institutions is more important than understanding the effectiveness of institutions in economic performance and tries to articulate a framework for institutional analysis. It is important to recognize the usual methodology which is employed by economist is suited to closed systems while in reality economic spheres are open, evolutionary, multi-layer and unpredictable systems. If we accept this ontological assumption, then we must employ a suitable methodology to make economic systems understandable. To do this, proposed methodology, recommends to begin economic inquiries from problems and to find answers from different layers of social reality and to unify acquired evident according to documented problem.

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