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Who Is Afraid Of Political Instability?

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Author Info
Nauro F. Campos (CERGE-EI)
Jeffrey B. Nugent (University of Southern California)

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Abstract

An unstable macroeconomic environment is often regarded as detrimental to economic growth. Among the sources contributing to such instability, much of the blame has been assigned to political issues. This paper empirically tests for a causal and negative long-run relationship between political instability and economic growth but finds no such relationship. Sensitivity analysis, however, indicates that there is indeed a short-run negative relationship and, that in the long-run and ignoring institutional factors, the group of African countries is the driving force. In other words, we suspect that excluding the African countries from their samples, results of a negative relation between SPI and growth would founder.

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Paper provided by EconWPA in its series Development and Comp Systems with number 0012016.

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Length: 20 pages
Date of creation: 23 Feb 2001
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Handle: RePEc:wpa:wuwpdc:0012016

Note: Type of Document - Acrobat PDF; pages: 20 ; figures: included
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Related research
Keywords: Economic growth Political instability Granger causality

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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

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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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. 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!]
  4. Campos, Nauro F & Nugent, Jeffrey B, 2000. "Investment and Instability," CEPR Discussion Papers 2609, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. 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!]
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