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Democracy and income: taking parameter heterogeneity and cross-country dependency into account

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  • Sequeira Tiago Neves

    (Departamento de Gestão e Economia and CEFAGE-UBI. Universidade da Beira Interior. Estrada do Sineiro. Univ. Beira Interior and CEFAGE-UBI, 6200-209 Covilhã, Portugal)

Abstract

This paper investigates the relationship between income and democracy using common correlated effects (CCE) extended estimators which take into account the fact that democracy variables are highly correlated across countries and the possibility of heterogeneous effects of income on democracy in different countries. Using a wider database than ever, covering annual data from 1804 to 2010 for almost all countries, we show that overall, the effect of income on democracy is significantly negative when the time-series features of the data are taken into account, a result that comes from the low-income countries. This calls back into question the controversy about the empirical effect of income on democracy.

Suggested Citation

  • Sequeira Tiago Neves, 2017. "Democracy and income: taking parameter heterogeneity and cross-country dependency into account," The B.E. Journal of Macroeconomics, De Gruyter, vol. 17(2), pages 1-19, June.
    • Handle: RePEc:bpj:bejmac:v:17:y:2017:i:2:p:19:n:15
    DOI: 10.1515/bejm-2016-0113
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    More about this item

    Keywords

    cross-country dependency; democracy; income;
    All these keywords.

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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