Working Paper: CEPR ID: DP6339
Authors: Torsten Persson; Guido Tabellini
Abstract: We estimate the effect of political regime transitions on growth with semi-parametric methods, combining difference in differences with matching, that have not been used in macroeconomic settings. Our semi-parametric estimates suggest that previous parametric estimates may have seriously underestimated the growth effects of democracy. In particular, we find an average negative effect on growth of leaving democracy on the order of -2 percentage points implying effects on income per capita as large as 45 percent over the 1960-2000 panel. Heterogenous characteristics of reforming and non-reforming countries appear to play an important role in driving these results.
Keywords: Democracy; Economic Growth; Matching Estimators
JEL Codes: H11; O11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Transitions from autocracy to democracy (P39) | Growth acceleration (O49) |
| Transitions from autocracy to democracy (P39) | Per capita income increase (O49) |
| Relapse from democracy to autocracy (D73) | Slow down growth (O42) |
| Relapse from democracy to autocracy (D73) | Income reduction (H53) |