Institutional Structure Credibility of Economic Policy Institutional Structure Institutions are the capital stock for policy-making. What happens in practice can often be much different than what is described on paper.
Economic actors see what happens in practice.
Thus the nature of institutions is crucial for economic actors' assessments of policy credibility. Institutional structures can constrain the policy options available to individual policy-makers or government organs. A horizontal separation of power among government organs, such as the separation of executive, legislative, and judicial organs, can ensuring that the policy-making process is subject to review and constraints from multiple centers of government power. Regular elections provide for a review of government actions and a possible temporal constraint on new policies. Bureaucratic and administrative hierarchies with distributed and circumscribed responsibilities foster decision-making inertia.