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A farewell to critical junctures: Sorting out long-run causality of income and democracy

  • Erich Gundlach
  • Martin Paldam

    ()

    (School of Economics and Management, University of Aarhus, Denmark)

We consider the empirical relevance of two opposing hypotheses on the causality between income and democracy: The Democratic Transition claims that rising incomes cause a transi¬ tion to democracy, whereas the Critical Junctures hypothesis denies this causal relation. Our empirical strategy is justified by Unified Growth Theory, which hypothe¬sizes that the present international income differences have roots in the prehistoric past. Thus, we use prehistoric measures of biogeography as instruments for modern income levels, and find a large long-run causal effect of income on the degree of democracy. This result rejects the Critical Junctures hypothesis, which is an important part of the Primacy of Institutions view.

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Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2008-04.

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Length: 25
Date of creation: 18 Feb 2008
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Handle: RePEc:aah:aarhec:2008-04
Contact details of provider: Web page: http://www.econ.au.dk/afn/

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  1. Daron Acemoglu & Simon Johnson & James A. Robinson & Pierre Yared, 2008. "Income and Democracy," American Economic Review, American Economic Association, vol. 98(3), pages 808-42, June.
  2. Masters, William A & McMillan, Margaret S, 2001. " Climate and Scale in Economic Growth," Journal of Economic Growth, Springer, vol. 6(3), pages 167-86, September.
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  4. Gregory Clark, 2007. "Introduction to A Farewell to Alms: A Brief Economic History of the World
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  7. Robert J. Barro, 1999. "Determinants of Democracy," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S158-S183, December.
  8. Vani K. Borooah & Martin Paldam, 2006. "Why is the World Short of Democracy? A Cross-Country Ananlysis of Barriers to Representative Government," ICER Working Papers 28-2006, ICER - International Centre for Economic Research.
  9. Andrei Shleifer & Robert W. Vishny, 1998. "The Quality of Government," Harvard Institute of Economic Research Working Papers 1847, Harvard - Institute of Economic Research.
  10. Acemoglu, Daron & Johnson, Simon & Robinson, James A. & Yared, Pierre, 2009. "Reevaluating the modernization hypothesis," Journal of Monetary Economics, Elsevier, vol. 56(8), pages 1043-1058, November.
  11. Torsten Persson & Guido Tabellini, 2006. "Democratic Capital: The Nexus of Political and Economic Change," NBER Working Papers 12175, National Bureau of Economic Research, Inc.
  12. Daron Acemoglu & Simon Johnson & James A. Robinson, 2000. "The Colonial Origins of Comparative Development: An Empirical Investigation," NBER Working Papers 7771, National Bureau of Economic Research, Inc.
  13. Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999. "A Data Set on Income Distribution," CEMA Working Papers 575, China Economics and Management Academy, Central University of Finance and Economics.
  14. Oded Galor, 2004. "From Stagnation to Growth: Unified Growth Theory," GE, Growth, Math methods 0409003, EconWPA.
  15. Martin Paldam & Erich Gundlach, 2008. "Two Views on Institutions and Development: The Grand Transition vs the Primacy of Institutions," Kyklos, Wiley Blackwell, vol. 61(1), pages 65-100, 02.
  16. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
  17. Klaus Deininger & Lyn Squire, 1996. "A New Data Set Measuring Income Inequality," CEMA Working Papers 512, China Economics and Management Academy, Central University of Finance and Economics.
  18. Olsson, Ola & Hibbs Jr., Douglas A., 2000. "Biogeography and Long-Run Economic Development," Working Papers in Economics 26, University of Gothenburg, Department of Economics, revised 11 Aug 2000.
  19. Martin Paldam & Erich Gundlach, 2008. "The Democratic Transition. A study of the causality between income and the Gastil democracy index," Kiel Working Papers 1459, Kiel Institute for the World Economy.
  20. Oded Galor & Omer Moav, 2000. "Natural Selection and the Origin of economic Growth," Working Papers 2000-18, Brown University, Department of Economics.
  21. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472 Elsevier.
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