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Political instability and economic growth: Evidence from two decades of transition in CEE

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  • Gurgul, Henryk
  • Lach, Łukasz

Abstract

This paper examines the nexus between political instability and economic growth in 10 CEE countries in transition in the period 1990-2009. Our results support the contention that political instability defined as a propensity for government change had a negative impact on growth. On the other hand, there was no causality in the opposite direction. A sensitivity analysis based on the application of a few hundred different variants of the initial econometric model confirmed the abovementioned findings only in the case where major government changes were applied to the definition of political instability.

Suggested Citation

  • Gurgul, Henryk & Lach, Łukasz, 2012. "Political instability and economic growth: Evidence from two decades of transition in CEE," MPRA Paper 37792, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:37792
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    Cited by:

    1. Cüneyt KILIÇ & Feyza BALAN & Unzule KURT, 2015. "Testing the Validity of Political Business Cycle for the Fragile Five Countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(605), W), pages 21-32, Winter.
    2. repec:agr:journl:v:4(605):y:2015:i:4(605):p:21-32 is not listed on IDEAS
    3. Xiaodong Gong & Maheshwar Rao, 2014. "‘The Economic Impact of Prolonged Political Instability: A Case Study of Fiji’," NATSEM Working Paper Series 14/26, University of Canberra, National Centre for Social and Economic Modelling.

    More about this item

    Keywords

    economic growth; political instability; CEE economies;

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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