We construct a model of simultaneous change and persistence in institutions. The model consists of landowning elites and workers, and the key economic decision concerns the form of economic institutions regulating the transaction of labour (e.g., competitive markets versus labour repression). The main idea is that equilibrium economic institutions are a result of the exercise of de jure and de facto political power. A change in political institutions, for example a move from non-democracy to democracy, alters the distribution of de jure political power, but the elite can intensify their investments in de facto political power, such as lobbying or the use of paramilitary forces, to partially or fully offset their loss of de jure power. In the baseline model, equilibrium changes in political institutions have no effect on the (stochastic) equilibrium distribution of economic institutions, leading to a particular form of persistence in equilibrium institutions, which we refer to as invariance. When the model is enriched to allow for limits on the exercise of de facto power by the elite in democracy or for costs of changing economic institutions, the equilibrium takes the form of a Markov regime-switching process with state dependence. Finally, when we allow for the possibility that changing political institutions is more difficult than altering economic institutions, the model leads to a pattern of captured democracy, whereby a democratic regime may survive, but choose economic institutions favouring the elite. The main ideas featuring in the model are illustrated using historical examples from the US South, Latin America and Liberia.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Publisher Info
Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
5603.
Find related papers by JEL classification: H2 - Public Economics - - Taxation, Subsidies, and Revenue N10 - Economic History - - Macroeconomics and Monetary Economics; Growth and Fluctuations - - - General, International, or Comparative N40 - Economic History - - Government, War, Law, and Regulation - - - General, International, or Comparative P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
This paper has been announced in the following NEP Reports:
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Davide Ticchi & Andrea Vindigni, 2002.
"Endogenous Constitutions,"
Economics Working Papers
896, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2005.
[Downloadable!]
Other versions:
Ticchi, Davide & Vindigni, Andrea, 2003.
"Endogenous Constitutions,"
Seminar Papers
726, Stockholm University, Institute for International Economic Studies.
[Downloadable!]
Stephen Coate & Stephen Morris, 1999.
"Policy Persistence,"
American Economic Review,
American Economic Association, vol. 89(5), pages 1327-1336, December.
[Downloadable!] (restricted)
Other versions:
Stephen Coate & Stephen Morris, .
""Policy Persistence '',"
CARESS Working Papres
95-19, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
[Downloadable!]
Stephen Coate & Stephen Morris, .
"Policy Persistence,"
CARESS Working Papres
97-2, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
[Downloadable!]
William Jack & Roger Lagunoff, .
"Dynamic Enfrachisement,"
Working Papers
gueconwpa~03-03-03, Georgetown University, Department of Economics.
[Downloadable!]
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)