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Income and democracy:Evidence from system GMM estimates

  • Benedikt Heid
  • Julian Langer
  • Mario Larch

Does higher income cause democracy? Accounting for the dynamic nature and highpersistence of income and democracy, we find a statistically significant positive relationbetween income and democracy for a postwar period sample of up to 150 countries. Ourresults are robust across different model specifications and instrument sets.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-Ifo_Working_Papers/wp-ifo-2011/IfoWorkingPaper-118.pdf
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Paper provided by Ifo Institute - Leibniz Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 118.

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Date of creation: 2011
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Handle: RePEc:ces:ifowps:_118
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  1. Acemoglu, Daron & Johnson, Simon & Robinson, James A & Yared, Pierre, 2007. "Reevaluating the Modernization Hypothesis," CEPR Discussion Papers 6430, C.E.P.R. Discussion Papers.
  2. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Within U.S. trade and the long shadow of the american secession," Munich Reprints in Economics 20587, University of Munich, Department of Economics.
  3. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, 02.
  4. Enrique Moral-Benito & Cristian Bartolucci, 2011. "Income and Democracy: Revisiting the Evidence," Carlo Alberto Notebooks 204, Collegio Carlo Alberto.
  5. Robert J. Barro, 1999. "Determinants of Democracy," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S158-S183, December.
  6. Jess Benhabib & Alejandro Corvalan & Mark M. Spiegel, 2011. "Reestablishing the Income-Democracy Nexus," NBER Working Papers 16832, National Bureau of Economic Research, Inc.
  7. Erich Gundlach & Martin Paldam, 2008. "A farewell to critical junctures: Sorting out long-run causality of income and democracy," Economics Working Papers 2008-04, Department of Economics and Business Economics, Aarhus University.
  8. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  9. Bobba, Matteo & Coviello, Decio, 2007. "Weak instruments and weak identification, in estimating the effects of education, on democracy," Economics Letters, Elsevier, vol. 96(3), pages 301-306, September.
  10. Alonso-Borrego, Cesar & Arellano, Manuel, 1999. "Symmetrically Normalized Instrumental-Variable Estimation Using Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(1), pages 36-49, January.
  11. Daron Acemoglu & Simon Johnson & James Robinson & Pierre Yared, 2005. "Income and Democracy," NBER Working Papers 11205, National Bureau of Economic Research, Inc.
  12. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
  13. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  14. Steve Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  15. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-54, July.
  16. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
  17. Daniel Treisman, 2011. "Income, Democracy, and the Cunning of Reason," NBER Working Papers 17132, National Bureau of Economic Research, Inc.
  18. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
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