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Political institutions and economic volatility

  • Klomp, Jeroen
  • de Haan, Jakob

We examine the effect of political 'institutions' on economic growth volatility, using data from more than 100 countries over the period 1960 to 2005, taking into account various control variables as suggested in previous studies. Our indicator of volatility is the relative standard deviation of the growth rate of GDP per capita. The results of a dynamic panel model indicate that democracy reduces economic volatility. We also find that some dimensions of political instability and policy uncertainty increase economic volatility.

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Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 25 (2009)
Issue (Month): 3 (September)
Pages: 311-326

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Handle: RePEc:eee:poleco:v:25:y:2009:i:3:p:311-326
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