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Centralized institutions and cascades

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  • Rubin, Jared

Abstract

Why do sudden and massive social, economic, and political changes occur when and where they do? Are there institutional preconditions that encourage such changes when present and discourage such changes when absent? I employ a general model which suggests that cascades which induce massive equilibrium changes are more likely to occur in regimes with centralized coercive power, defined as the ability to impose more than one type of sanction (economic, legal, political, social, or religious). Centralized authorities are better able to suppress subversive actions when external shocks are small, as citizens have little incentive to incur numerous types of sanctions. However, citizens are also more likely to lie about their internal preferences in such regimes (e.g., falsely declare loyalty to an oppressive government), entailing that larger shocks are more likely to trigger a cascade to a vastly different equilibrium. The model is applied to the severity of protests that followed austerity measures taken in developing nations since the 1970s.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 42 (2014)
Issue (Month): 2 ()
Pages: 340-357

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Handle: RePEc:eee:jcecon:v:42:y:2014:i:2:p:340-357

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Web page: http://www.elsevier.com/locate/inca/622864

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Keywords: Institutions; Centralization; Revolution; Cascades; Preference falsification;

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Cited by:
  1. Avner Greif & Steven Tadelis, 2010. "A Theory of Moral Persistence: Crypto-Morality and Political Legitimacy," Discussion Papers, Stanford Institute for Economic Policy Research 09-028, Stanford Institute for Economic Policy Research.
  2. Michael D. Makowsky & Jared Rubin, 2011. "An Agent-Based Model of Centralized Institutions, Social Network Technology, and Revolution," Working Papers, Towson University, Department of Economics 2011-05, Towson University, Department of Economics, revised Oct 2011.
  3. Rubin, Jared, 2011. "Printing and Protestants: reforming the economics of the Reformation," MPRA Paper 31267, University Library of Munich, Germany.

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