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Democracy, openness and jumps in growth

  • Gabriele Deana

    (Bocconi University and University of Milan - Italy)

  • Andrea Gamba

    (CESPRI Bocconi University, Milan - Italy)

We identify multiple structural breaks in a growth series using the econometric method developed by Bai and Perron (1998, 2003). We then regress the indicator of detected positive and negative breaks on three kinds of explanatory variables: external shocks, institutions and policies. Our results show that a change towards democratization fosters booms. Economic liberalizations act as an insurance against the probability of incurring into a crisis, while moves towards autarky undermine the chances of experiencing booms. We employ program evaluation to isolate single reforms and to assess the importance of reform sequencing: we find that democratization is a driver for growth and subsequent liberalization ensures stability.

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Paper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 221.

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Length: pages 52
Date of creation: Jul 2008
Date of revision: Jul 2008
Handle: RePEc:cri:cespri:wp221
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