Working Paper: CEPR ID: DP7194
Authors: Paola Giuliano; Prachi Mishra; Antonio Spilimbergo
Abstract: Empirical evidence on the relationship between democracy and economic reforms is scarce, limited to few reforms and countries and for few years. This paper studies the impact of democracy on the adoption of economic reforms using a new dataset on reforms in the financial, capital, public, and banking sectors, product and labor markets, agriculture, and trade for 150 countries over the period 1960-2004. Democracy has a positive and significant impact on the adoption of economic reforms but there is no evidence that economic reforms foster democracy. Our results are robust to the inclusion of a large variety of controls and estimation strategies.
Keywords: economic liberalization; financial markets; institutions; political economy; product markets; transition
JEL Codes: E6; O57
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic reforms (E69) | democracy (D72) |
| democracy (D72) | economic reforms (E69) |
| quality of democratic institutions (D72) | economic reforms (E69) |