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The Growth Effect of Democracy: Is It Heterogeneous and How Can It Be Estimated?

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Author Info
Persson, Torsten
Tabellini, Guido

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Abstract

We estimate the effect of political regime transitions on growth with semi-parametric methods, combining difference in differences with matching, that have not been used in macroeconomic settings. Our semi-parametric estimates suggest that previous parametric estimates may have seriously underestimated the growth effects of democracy. In particular, we find an average negative effect on growth of leaving democracy on the order of -2 percentage points implying effects on income per capita as large as 45 percent over the 1960-2000 panel. Heterogenous characteristics of reforming and non-reforming countries appear to play an important role in driving these results.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6339.

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Date of creation: Jun 2007
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Handle: RePEc:cpr:ceprdp:6339

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Related research
Keywords: democracy; economic growth; matching estimators;

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Find related papers by JEL classification:
H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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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.:
  1. Timothy Besley & Masayuki Kudamatsu, 2007. "Making Autocracy Work," STICERD - Development Economics Papers 48, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
    Other versions:
  2. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February. [Downloadable!] (restricted)
    Other versions:
  3. Torsten Persson & Guido Tabellini, 2006. "Democracy and Development: The Devil in the Details," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  4. Giavazzi, Francesco & Tabellini, Guido, 2005. "Economic and political liberalizations," Journal of Monetary Economics, Elsevier, vol. 52(7), pages 1297-1330, October. [Downloadable!] (restricted)
    Other versions:
  5. Susan Athey & Guido W. Imbens, 2006. "Identification and Inference in Nonlinear Difference-in-Differences Models," Econometrica, Econometric Society, vol. 74(2), pages 431-497, 03. [Downloadable!] (restricted)
  6. Elias Papaioannou & Gregorios Siourounis, 2007. "Democratization And Growth," CEDI Discussion Paper Series 07-13, Centre for Economic Development and Institutions(CEDI), Brunel University. [Downloadable!]
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  7. Alberto Abadie, 2005. "Semiparametric Difference-in-Differences Estimators," Review of Economic Studies, Blackwell Publishing, vol. 72(1), pages 1-19, 01. [Downloadable!] (restricted)
  8. Persson, Torsten & Tabellini, Guido, 2006. "Democratic Capital: The Nexus of Political and Economic Change," CEPR Discussion Papers 5654, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. Michael Lechner, 1999. "Identification and Estimation of Causal Effects of Multiple Treatments Under the Conditional Independence Assumption," IZA Discussion Papers 91, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Dani Rodrik & Romain Wacziarg, 2005. "Do Democratic Transitions Produce Bad Economic Outcomes?," American Economic Review, American Economic Association, vol. 95(2), pages 50-55, May. [Downloadable!]
  11. Benjamin F. Jones & Benjamin A. Olken, 2005. "Do Leaders Matter? National Leadership and Growth Since World War II," The Quarterly Journal of Economics, MIT Press, vol. 120(3), pages 835-864, August.
  12. Persson, Torsten, 2005. "Forms of Democracy, Policy and Economic Development," CEPR Discussion Papers 4938, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  13. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Blackwell Publishing, vol. 65(2), pages 261-94, April. [Downloadable!] (restricted)
  14. Richard Blundell & Monica Costa Dias & Costas Meghir & John Van Reenen, 2001. "Evaluating the employment impact of a mandatory job search assistance program," IFS Working Papers W01/20, Institute for Fiscal Studies. [Downloadable!]
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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.)

  1. Pauline Grosjean & Claudia Senik, 2007. "Should market liberalization precede democracy? Causal relations between political preferences and development," PSE Working Papers 2007-17, PSE (Ecole normale supérieure). [Downloadable!]
    Other versions:
  2. Olper, Alessandro & Raimondi, Valentina, 2008. "Consitutional Rules and Agricultural Policy Outcomes," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43870, European Association of Agricultural Economists. [Downloadable!]
    Other versions:
  3. Pääkkönen, Jenni, 2009. "Economic Freedom as a Driver for Growth in Transition," BOFIT Discussion Papers 1/2009, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
  4. Pereira, Carlos & Kuhl Teles, Vladimir, 2009. "Political Institutions As Substitute For Democracy: A Political Economy Analysis Of Economic Growth," Textos para discussão 196, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil). [Downloadable!]
  5. Guido Tabellini, 2007. "Institutions and Culture," Working Papers 330, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
  6. Antonio Ciccone & Markus Brückner, 2008. "Rain and the Democratic Window of Opportunity," Economics Working Papers 1063, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
    Other versions:
  7. Elias Papaioannou & Gregorios Siourounis, 2007. "Democratization And Growth," CEDI Discussion Paper Series 07-13, Centre for Economic Development and Institutions(CEDI), Brunel University. [Downloadable!]
    Other versions:
  8. Vladimir Kühl Teles & Carlos Pereira, 2008. "Political institutions matter for incipient but not for consolidated democracies: a political economy analysis of economic growth," Anais do XXXVI Encontro Nacional de Economia [Proceedings of the 36th Brazilian Economics Meeting] 200807211539390, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  9. Gabriele Deana & Andrea Gamba, 2008. "Democracy, openness and jumps in growth," CESPRI Working Papers 221, CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy, revised Jul 2008. [Downloadable!]
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