Working Paper: NBER ID: w4173
Authors: Alberto Alesina; Sule Ozler; Nouriel Roubini; Phillip Swagel
Abstract: This paper investigates the relationship between political instability and per capita GDP growth in a sample of 113 countries for the period 1950-1982. We define ?political instability? as the propensity of a government collapse, and we estimate a model in which political instability and economic growth are jointly determined. The main result of this paper is that in countries and time periods with a high propensity of government collapse, growth is significantly lower than otherwise. This effect remains strong when we restrict our definition of ?government change? to cases of substantial changes of the government.
Keywords: Political instability; Economic growth; Government collapse
JEL Codes: N10; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Political instability (propensity for government collapse) (P26) | Economic growth (per capita GDP growth) (O49) |
| Uncertainty from political instability (D89) | Investment and economic initiatives (E22) |
| Investment and economic initiatives (E22) | Economic growth (per capita GDP growth) (O49) |
| Frequent government collapses (H12) | Persistent environment of instability (D50) |
| Persistent environment of instability (D50) | Economic growth (per capita GDP growth) (O49) |