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Who Is Afraid Of Political Instability?

Author

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  • Nauro F. Campos

    (CERGE-EI)

  • Jeffrey B. Nugent

    (University of Southern California)

Abstract

An unstable macroeconomic environment is often regarded as detrimental to economic growth. Among the sources contributing to such instability, much of the blame has been assigned to political issues. This paper empirically tests for a causal and negative long-run relationship between political instability and economic growth but finds no such relationship. Sensitivity analysis, however, indicates that there is indeed a short-run negative relationship and, that in the long-run and ignoring institutional factors, the group of African countries is the driving force. In other words, we suspect that excluding the African countries from their samples, results of a negative relation between SPI and growth would founder.

Suggested Citation

  • Nauro F. Campos & Jeffrey B. Nugent, 2001. "Who Is Afraid Of Political Instability?," Development and Comp Systems 0012016, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpdc:0012016
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    More about this item

    Keywords

    Economic growth; Political instability; Granger causality;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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