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Political Instability and Growth in Dictatorships

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  • Jody Overland
  • Kenneth L. Simons
  • Michael Spagat

Abstract

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.

Suggested Citation

  • Jody Overland & Kenneth L. Simons & Michael Spagat, 2000. "Political Instability and Growth in Dictatorships," William Davidson Institute Working Papers Series 354, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2000-354
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    More about this item

    Keywords

    dictatorship; growth; political economy; bifurcation;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • H - Public Economics

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