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World Price Shocks, Income, and Democratization

Author

Listed:
  • Ben Zissimos

    (Department of Economics, University of Exeter)

Abstract

This paper shows how a world price shock can increase the likelihood that democratization must be used to resolve the threat of revolution. Initially, a ruling elite may be able to use trade policy to maintain political stability. But a world price shock can push the country into a situation where the elite face a commitment problem that only democratization can resolve. Because the world price shock may also reduce average incomes, the model provides a way to understand why the level of national income per capita and democracy may not be positively correlated. The model is also useful for understanding dictatorial regimes ?rebuttal of World Bank calls to keep their export markets open in the face of the 2007-08 world food crisis.

Suggested Citation

  • Ben Zissimos, 2014. "World Price Shocks, Income, and Democratization," Discussion Papers 1412, University of Exeter, Department of Economics.
  • Handle: RePEc:exe:wpaper:1412
    as

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    File URL: http://people.exeter.ac.uk/RePEc/dpapers/DP1412.pdf
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    References listed on IDEAS

    as
    1. Zissimos, Ben, 2017. "A theory of trade policy under dictatorship and democratization," Journal of International Economics, Elsevier, vol. 109(C), pages 85-101.
    2. 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.
    3. repec:ucp:bkecon:9780226731445 is not listed on IDEAS
    4. Philippe Aghion & Steven Durlauf (ed.), 2005. "Handbook of Economic Growth," Handbook of Economic Growth, Elsevier, edition 1, volume 1, number 1.
    5. Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Democracy; institutions; price shocks; social con?ict; trade policy.;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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