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Income and democracy:Evidence from system GMM estimates

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  • Benedikt Heid
  • Julian Langer
  • Mario Larch

Abstract

Does higher income cause democracy? Accounting for the dynamic nature and highpersistence of income and democracy, we find a statistically significant positive relationbetween income and democracy for a postwar period sample of up to 150 countries. Ourresults are robust across different model specifications and instrument sets.

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Bibliographic Info

Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 118.

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Date of creation: 2011
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Handle: RePEc:ces:ifowps:_118

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Keywords: Income; democracy; dynamic panel estimators;

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References

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  1. Daron Acemoglu & Simon Johnson & James A. Robinson & Pierre Yared, 2007. "Reevaluating the Modernization Hypothesis," NBER Working Papers 13334, National Bureau of Economic Research, Inc.
  2. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, StataCorp LP, vol. 9(1), pages 86-136, March.
  3. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Within U.S. trade and the long shadow of the american secession," Munich Reprints in Economics, University of Munich, Department of Economics 20587, University of Munich, Department of Economics.
  4. Erich Gundlach & Martin Paldam, 2008. "A farewell to critical junctures: Sorting out long-run causality of income and democracy," Economics Working Papers, School of Economics and Management, University of Aarhus 2008-04, School of Economics and Management, University of Aarhus.
  5. David Roodman, 2007. "A Note on the Theme of Too Many Instruments," Working Papers, Center for Global Development 125, Center for Global Development.
  6. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, Elsevier, vol. 126(1), pages 25-51, May.
  7. Barro, Robert J., 1999. "Determinants of Democracy," Scholarly Articles 3451297, Harvard University Department of Economics.
  8. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  9. Matteo Bobba & Decio Coviello, 2006. "Weak Instruments and Weak Identification in Estimating the Effects of Education on Democracy," Research Department Publications, Inter-American Development Bank, Research Department 4472, Inter-American Development Bank, Research Department.
  10. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, Econometric Society, vol. 50(4), pages 1029-54, July.
  11. Daniel Treisman, 2011. "Income, Democracy, and the Cunning of Reason," NBER Working Papers 17132, National Bureau of Economic Research, Inc.
  12. Moral-Benito, Enrique & Bartolucci, Cristian, 2012. "Income and democracy: Revisiting the evidence," Economics Letters, Elsevier, Elsevier, vol. 117(3), pages 844-847.
  13. R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers, Economics Group, Nuffield College, University of Oxford W14&104., Economics Group, Nuffield College, University of Oxford.
  14. Alonso-Borrego, Cesar & Arellano, Manuel, 1999. "Symmetrically Normalized Instrumental-Variable Estimation Using Panel Data," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 17(1), pages 36-49, January.
  15. Daron Acemoglu & Simon Johnson & James Robinson & Pierre Yared, 2005. "Income and Democracy," NBER Working Papers 11205, National Bureau of Economic Research, Inc.
  16. Steve Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  17. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, Elsevier, vol. 68(1), pages 29-51, July.
  18. Jess Benhabib & Alejandro Corvalan & Mark M. Spiegel, 2011. "Reestablishing the Income-Democracy Nexus," NBER Working Papers 16832, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Benhabib, Jess & Corvalan, Alejandro & Spiegel, Mark M., 2013. "Income and democracy: Evidence from nonlinear estimations," Economics Letters, Elsevier, Elsevier, vol. 118(3), pages 489-492.
  2. Hugo J. Faria & Hugo M. Montesinos-Yufa & Daniel R. Morales, 2014. "Should the Modernization Hypothesis Survive Acemoglu, Johnson, Robinson, and Yared? Some More Evidence," Econ Journal Watch, Econ Journal Watch, Econ Journal Watch, vol. 11(1), pages 17-36, January.
  3. Lin, Faqin & Sim, Nicholas C.S., 2014. "Baltic Dry Index and the democratic window of opportunity," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 143-159.
  4. Moral-Benito, Enrique & Bartolucci, Cristian, 2012. "Income and democracy: Revisiting the evidence," Economics Letters, Elsevier, Elsevier, vol. 117(3), pages 844-847.
  5. Carolyn Chisadza and Manoel Bittencourt, 2014. "Is Democracy Eluding Sub-Saharan Africa?," Working Papers, Economic Research Southern Africa 437, Economic Research Southern Africa.
  6. Armey, Laura E. & McNab, Robert M., 2012. "Democratization and civil war," MPRA Paper 42460, University Library of Munich, Germany.
  7. Fedderke, Johannes & Klitgaard, Robert, 2013. "How Much Do Rights Matter?," World Development, Elsevier, Elsevier, vol. 51(C), pages 187-206.

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