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Democracy, Growth, Heterogeneity, and Robustness

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  • Eberhardt, Markus

Abstract

I motivate and empirically investigate differential long-run growth effects of democratisation across countries. While the existing literature recognises the potential for such heterogeneity, empirical implementations to date unanimously assume a common democracy-growth nexus across countries. Adopting novel methods for causal inference in policy evaluation I relax this assumption to confirm that in the long-run democracy has a positive average effect on per capita income of around 10%, adopting a range of alternative definitions for regime change in the form of binary indicators. Guided by existing hypotheses, additional analysis probes the patterns of the heterogeneous 'democratic dividend' across countries. A second common feature of this literature as well as cross-country growth empirics more generally is the absence of concerns for sample selection or influential observations. I carry out two rule-based robustness exercises to demonstrate that my empirical findings are highly robust to substantial changes to the sample.

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  • Eberhardt, Markus, 2021. "Democracy, Growth, Heterogeneity, and Robustness," CEPR Discussion Papers 16719, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:16719
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    More about this item

    Keywords

    democracy; Difference-in-Difference Estimator; growth; Interactive Fixed Effects; Political development;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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