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The Golden Hello and Political Transitions

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  • Toke S. Aidt
  • Facundo Albornoz
  • Martin Gassebner

Abstract

We analyze the influence of IMF and World Bank programs on political regime transitions. We develop an extended version of Acemoglu and Robinson’s [American Economic Review 91, 2001] model of political transitions to show how the anticipation of new loans from in-ternational financial institutions can trigger political transitions which would not otherwise have taken place. We test this unexplored implication of the theory empirically. We find in a world sample from 1970 to 2002 that the anticipation of receiving new programs immediately after a political regime transition increases the probability of a transition from autocracy to democracy and reduces the probability of democratic survival.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2012/wp-cesifo-2012-10/cesifo1_wp3957.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3957.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_3957

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Keywords: political transitions; democracy; autocracy; IMF; World Bank;

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References

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  1. Dreher, Axel & Sturm, Jan-Egbert & Vreeland, James Raymond, 2009. "Global horse trading: IMF loans for votes in the United Nations Security Council," European Economic Review, Elsevier, vol. 53(7), pages 742-757, October.
  2. Kalyvitis, Sarantis & Vlachaki, Irene, 2012. "When does more aid imply less democracy? An empirical examination," European Journal of Political Economy, Elsevier, vol. 28(1), pages 132-146.
  3. Paul J. Burke & Andrew Leigh, 2010. "Do Output Contractions Trigger Democratic Change?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 124-57, October.
  4. Brückner, Markus & Ciccone, Antonio, 2008. "Rain and the Democratic Window of Opportunity," CEPR Discussion Papers 6691, C.E.P.R. Discussion Papers.
  5. William Easterly & Shanker Satyanath & Daniel Berger, 2008. "Superpower Interventions and their Consequences for Democracy: An Empirical Inquiry," NBER Working Papers 13992, National Bureau of Economic Research, Inc.
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  7. Acemoglu, Daron & Robinson, James A, 1998. "Why did the West Extend the Franchise? Democracy, Inequality and Growth in Historical Perspective," CEPR Discussion Papers 1797, C.E.P.R. Discussion Papers.
  8. Dreher, Axel & Gassebner, Martin, 2008. "Do IMF and World Bank programs induce government crises An empirical analysis," Proceedings of the German Development Economics Conference, Zurich 2008 13, Verein für Socialpolitik, Research Committee Development Economics.
  9. Xavier Sala-i-Martin, 1997. "I just ran four million regressions," Economics Working Papers 201, Department of Economics and Business, Universitat Pompeu Fabra.
  10. Axel Dreher & Roland Vaubel, 2004. "Do IMF and IBRD Cause Moral Hazard and Political Business Cycles? Evidence from Panel Data," Open Economies Review, Springer, vol. 15(1), pages 5-22, January.
  11. Toke S. Aidt & Uk Hwang, 2008. "On the Internalization of Cross-National Externalities through Political Markets: The Case of Labour Standards," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(3), pages 509-533, September.
  12. Martin Gassebner & Michael J. Lamla & James Raymond Vreeland, 2009. "Extreme Bounds of Democracy," KOF Working papers 09-224, KOF Swiss Economic Institute, ETH Zurich.
  13. Silvia Marchesi & Laura Sabani, 2005. "IMF concern for reputation and conditional lending failure: theory and empirics," LSE Research Online Documents on Economics 24648, London School of Economics and Political Science, LSE Library.
  14. Mark Gradstein, 2007. "Inequality, democracy and the protection of property rights," Economic Journal, Royal Economic Society, vol. 117(516), pages 252-269, 01.
  15. Roberto Bonfatti, 2011. "An Economic Theory of Foreign Interventions and Regime Change," CESifo Working Paper Series 3475, CESifo Group Munich.
  16. Alesina, Alberto & Dollar, David, 2000. " Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March.
  17. Aidt, Toke S. & Albornoz, Facundo, 2011. "Political regimes and foreign intervention," Journal of Development Economics, Elsevier, vol. 94(2), pages 192-201, March.
  18. Daron Acemoglu & James Robinson, 1999. "A Theory of Political Transitions," Working papers 99-26, Massachusetts Institute of Technology (MIT), Department of Economics.
  19. Axel Dreher & Matthew Gould & Matthew Rablen & James Raymond Vreeland, 2012. "The Determinants of Election to the United Nations Security Council," CESifo Working Paper Series 3902, CESifo Group Munich.
  20. Timur Kuran, 1989. "Sparks and prairie fires: A theory of unanticipated political revolution," Public Choice, Springer, vol. 61(1), pages 41-74, April.
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  22. Congleton, Roger D., 2007. "From royal to parliamentary rule without revolution: The economics of constitutional exchange within divided governments," European Journal of Political Economy, Elsevier, vol. 23(2), pages 261-284, June.
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Cited by:
  1. Facundo Albornoz & Esther Hauk, 2010. "Civil War and Foreign Influence," UFAE and IAE Working Papers 836.10, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC), revised 19 Dec 2010.

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