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Who is Afraid of Political Instability?

  • Nauro F. Campos
  • Jeffrey B. Nugent

An unstable macroeconomic environment is often regarded as detrimental to economic growth. Among the sources contributing to such instability, the literature has assigned most of the blame to political issues. This paper empirically tests for a causal and negative long-term relation between political instability and economic growth, but finds no evidence of such a relationship. Sensitivity analysis indicates that there is a contemporaneous negative relationship and that, in the long run and ignoring institutional factors, the Sub-Saharan Africa group plays the determining role in steering this relationship into causal and negative.

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Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 326.

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Length: pages
Date of creation: 01 Jul 2000
Date of revision:
Handle: RePEc:wdi:papers:2000-326
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