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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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  1. Benjamin F. Jones & Benjamin A. Olken, 2008. "The Anatomy of Start-Stop Growth," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 582-587, August.
  2. Torsten Persson & Guido Tabellini, 2007. "The Growth Effect of Democracy: Is It Heterogenous and How Can It Be Estimated?," NBER Working Papers 13150, National Bureau of Economic Research, Inc.
  3. Edwin Leuven & Barbara Sianesi, 2003. "PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing," Statistical Software Components S432001, Boston College Department of Economics, revised 19 Jan 2015.
  4. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
  5. 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.
  6. Perron, P. & Bai, J., 1995. "Estimating and Testing Linear Models with Multiple Structural Changes," Cahiers de recherche 9552, Centre interuniversitaire de recherche en ├ęconomie quantitative, CIREQ.
  7. Barro, Robert J, 1996. " Democracy and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 1-27, March.
  8. Romain Wacziarg & Karen Horn Welch, 2003. "Trade Liberalization and Growth: New Evidence," NBER Working Papers 10152, National Bureau of Economic Research, Inc.
  9. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  10. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, 09.
  11. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2002. "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development," NBER Working Papers 9305, National Bureau of Economic Research, Inc.
  12. Dani Rodrik & Romain Wacziarg, 2005. "Do Democratic Transitions Produce Bad Economic Outcomes?," American Economic Review, American Economic Association, vol. 95(2), pages 50-55, May.
  13. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
  14. Meredith Reid Sarkees & Phil Schafer, 2000. "The Correlates of War Data On War: an Update To 1997," Conflict Management and Peace Science, Peace Science Society (International), vol. 18(1), pages 123-144, February.
  15. Tavares, Jose & Wacziarg, Romain, 2001. "How democracy affects growth," European Economic Review, Elsevier, vol. 45(8), pages 1341-1378, August.
  16. Barbara Sianesi, 2001. "Propensity score matching," United Kingdom Stata Users' Group Meetings 2001 12, Stata Users Group, revised 23 Aug 2001.
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