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Political Instability and Growth in Dictatorships

  • Jody Overland
  • Kenneth L. Simons
  • Michael Spagat

We model growth in dictatorships facing each period an endogenous probability of ``political catastrophe'' that would extinguish the regime's wealth extraction ability. Domestic capital exhibits a bifurcation point determining economic growth or shrinkage. With low initial domestic capital the dictator plunders the country's resources and the economy shrinks. With high initial domestic capital the economy eventually grows faster than is socially optimal.

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File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp354.pdf
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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 354.

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Length: pages
Date of creation: 01 Nov 2000
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Handle: RePEc:wdi:papers:2000-354
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