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Who is Afraid of Political Instability?

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Author Info
Nauro F. Campos
Jeffrey B. Nugent

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Abstract

An unstable macroeconomic environment is often regarded as detrimental to economic growth. Among the sources contributing to such instability, the literature has assigned most of the blame to political issues. This paper empirically tests for a causal and negative long-term relation between political instability and economic growth, but finds no evidence of such a relationship. Sensitivity analysis indicates that there is a contemporaneous negative relationship and that, in the long run and ignoring institutional factors, the Sub-Saharan Africa group plays the determining role in steering this relationship into causal and negative.

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Paper provided by William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number 326.

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Date of creation: 01 Jul 2000
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Handle: RePEc:wdi:papers:2000-326

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Related research
Keywords: economic growth; political instability;

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Find related papers by JEL classification:
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
E23 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Production
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior

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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.:
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Full references

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. Campos, Nauro F & Kuzeyev, Vitaliy, 2007. "On the Dynamics of Ethnic Fractionalization," CEPR Discussion Papers 6360, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Demir, Firat, 2007. "Volatility of short term capital flows and socio-political instability in developing countries: A review," MPRA Paper 1943, University Library of Munich, Germany, revised Jan 2008. [Downloadable!]
  3. Campos, Nauro F. & Karanasos, Menelaos G. & Tan, Bin, 2008. "Two to Tangle: Financial Development, Political Instability and Economic Growth in Argentina (1896–2000)," IZA Discussion Papers 3752, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Josef C. Brada & Ali M. Kutan & Taner M. Yigit, 2004. "The Effects of Transition and Political Instability On Foreign Direct Investment Inflows: Central Europe and the Balkans," William Davidson Institute Working Papers Series wp729, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  5. Campos, Nauro F & Gassebner, Martin, 2009. "International Terrorism, Political Instability and the Escalation Effect," CEPR Discussion Papers 7226, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. Nauros F. Campos & Jeffrey B. Nugent, 2000. "Investment and Instability," William Davidson Institute Working Papers Series 337, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  7. Susan Anderson & Peter Boettke, 2004. "The Development Set: The Character of the Journal of Development Economics 2002," Econ Journal Watch, Atlas Economic Research Foundation, vol. 1(2), pages 306-318, August. [Downloadable!]
  8. Berggren, Niclas & Bergh, Andreas & Bjørnskov, Christian, 2009. "The growth effects of institutional instability," Working Papers 2009:8, Lund University, Department of Economics. [Downloadable!]
    Other versions:
  9. Quan V. Le, 2004. "Political and economic determinants of private investment," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(4), pages 589-604. [Downloadable!]
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