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The Golden Halo and Political Transitions

  • Aidt, Toke
  • Albornoz, Facundo
  • Gassebner, Martin

In this paper we analyze the role of the IMF and the World Bank in triggering changes in the political regime, i.e., democracy and autocracy. We develop a theoretical model which predicts that anticipation of financial flows from international financial institutions may trigger political regime changes which would not take place otherwise. We test the implications of our model empirically and find support both for the role of perfectly foreseen IMF and World Bank programs and of the history of previous World Bank programs. The magnitude of this effects is quite substantial.

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Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Hannover 2010 with number 48.

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Date of creation: 2010
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Handle: RePEc:zbw:gdec10:48
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  1. Daron Acemoglu & James A. Robinson, 2001. "A Theory of Political Transitions," American Economic Review, American Economic Association, vol. 91(4), pages 938-963, September.
  2. Silvia Marchesi & Laura Sabani, 2005. "IMF Concern for Reputation and Conditional Lending Failure: Theory and Empirics," Development Working Papers 206, Centro Studi Luca d\'Agliano, University of Milano.
  3. William Easterly & Shanker Satyanath & Daniel Berger, 2008. "Superpower Interventions and their Consequences for Democracy: An Empirical Inquiry," NBER Working Papers 13992, National Bureau of Economic Research, Inc.
  4. Toke S. Aidt & Uk Hwang, 2008. "On the Internalization of Cross-National Externalities through Political Markets: The Case of Labour Standards," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(3), pages 509-533, September.
  5. Acemoglu, Daron & Robinson, James A, 1998. "Why did the West Extend the Franchise? Democracy, Inequality and Growth in Historical Perspective," CEPR Discussion Papers 1797, C.E.P.R. Discussion Papers.
  6. Xavier Sala-i-Martin, 1997. "I just ran four million regressions," Economics Working Papers 201, Department of Economics and Business, Universitat Pompeu Fabra.
  7. Brückner, Markus & Ciccone, Antonio, 2008. "Rain and the Democratic Window of Opportunity," CEPR Discussion Papers 6691, C.E.P.R. Discussion Papers.
  8. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
  9. Axel Dreher & Matthew Gould & Matthew Rablen & James Vreeland, 2014. "The determinants of election to the United Nations Security Council," Public Choice, Springer, vol. 158(1), pages 51-83, January.
  10. Roberto Bonfatti, 2011. "An Economic Theory of Foreign Interventions and Regime Change," Economics Series Working Papers 549, University of Oxford, Department of Economics.
  11. Berger, Daniel & Easterly, William & Nunn, Nathan & Satyanath, Shanker, 2013. "Commercial Imperialism? Political Influence and Trade during the Cold War," Scholarly Articles 11986334, Harvard University Department of Economics.
  12. Axel Dreher & Martin Gassebner, 2008. "Do IMF and World Bank programs induce government crises? An empirical analysis," KOF Working papers 08-200, KOF Swiss Economic Institute, ETH Zurich.
  13. Martin Gassebner & Michael J. Lamla & James Raymond Vreeland, 2009. "Extreme Bounds of Democracy," KOF Working papers 09-224, KOF Swiss Economic Institute, ETH Zurich.
  14. Congleton, Roger D., 2007. "From royal to parliamentary rule without revolution: The economics of constitutional exchange within divided governments," European Journal of Political Economy, Elsevier, vol. 23(2), pages 261-284, June.
  15. Alberto Alesina & David Dollar, 1998. "Who Gives Foreign Aid to Whom and Why?," NBER Working Papers 6612, National Bureau of Economic Research, Inc.
  16. Timur Kuran, 1989. "Sparks and prairie fires: A theory of unanticipated political revolution," Public Choice, Springer, vol. 61(1), pages 41-74, April.
  17. Mark Gradstein, 2007. "Inequality, democracy and the protection of property rights," Economic Journal, Royal Economic Society, vol. 117(516), pages 252-269, 01.
  18. Paul J. Burke & Andrew Leigh, 2010. "Do Output Contractions Trigger Democratic Change?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 124-57, October.
  19. Kalyvitis, Sarantis & Vlachaki, Irene, 2012. "When does more aid imply less democracy? An empirical examination," European Journal of Political Economy, Elsevier, vol. 28(1), pages 132-146.
  20. Axel Dreher & Roland Vaubel, 2004. "Do IMF and IBRD Cause Moral Hazard and Political Business Cycles? Evidence from Panel Data," Open Economies Review, Springer, vol. 15(1), pages 5-22, January.
  21. Aidt, Toke S. & Albornoz, Facundo, 2011. "Political regimes and foreign intervention," Journal of Development Economics, Elsevier, vol. 94(2), pages 192-201, March.
  22. repec:cup:cbooks:9780521855266 is not listed on IDEAS
  23. Christopher J. Ellis & John Fender, 2011. "Information Cascades and Revolutionary Regime Transitions," Economic Journal, Royal Economic Society, vol. 121(553), pages 763-792, 06.
  24. Dreher, Axel & Sturm, Jan-Egbert & Vreeland, James Raymond, 2009. "Global horse trading: IMF loans for votes in the United Nations Security Council," European Economic Review, Elsevier, vol. 53(7), pages 742-757, October.
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