Gurgul, Henryk and Lach, Łukasz (2012): Political instability and economic growth: Evidence from two decades of transition in CEE.
Download (356kB) | Preview
This paper examines the nexus between political instability and economic growth in 10 CEE countries in transition in the period 1990-2009. Our results support the contention that political instability defined as a propensity for government change had a negative impact on growth. On the other hand, there was no causality in the opposite direction. A sensitivity analysis based on the application of a few hundred different variants of the initial econometric model confirmed the abovementioned findings only in the case where major government changes were applied to the definition of political instability.
|Item Type:||MPRA Paper|
|Original Title:||Political instability and economic growth: Evidence from two decades of transition in CEE|
|Keywords:||economic growth, political instability, CEE economies|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General|
|Depositing User:||Henryk Gurgul|
|Date Deposited:||02. Apr 2012 11:56|
|Last Modified:||12. Feb 2013 13:40|
1. Adebayo, A. (1985) Brain Drain within the Ecowas Region. A Journal of Opinion, 14, pp. 37–38.
2. Adkins, L.C. (2009) An Instrumental Variables Probit Estimator Using Gretl. EHUCHAPS, Universidad del País Vasco - Facultad de Ciencias Económicas y Empresariales.
3. Alesina, A., Ozler, S., Roubini, N. and Swagel, P. (1996) Political Instability and Economic Growth. Journal of Economic Growth, 1(2), pp. 189–211.
4. Amemiya, T. (1978) The estimation of a simultaneous equation generalized probit model. Econometrica, 46(5), pp. 1193–1205.
5. Barnow, B.S., Cain G.G. and Goldberger A.S. (1981) Issues in the analysis of selectivity bias. Evaluation Studies Review Annual, 5, pp. 43–59.
6. Barro, R. (1991) Economic growth in a cross section of countries. Quarterly Journal of Economics, 106, pp. 407–444.
7. Barro, R. (1996) Democracy and growth. Journal of Economic Growth, 1, pp. 1–27.
8. Barro, R. (1999) Determinants of democracy. Journal of Political Economy, 107, pp. 158–183.
9. Blanco, L. and Grier, R. (2009) Long Live Democracy: The Determinants of Political Instability in Latin America. Journal of Development Studies, 45(1), pp. 76–95.
10. Bleaney, M. and Nishiyama, A. (2002) Explaining Growth: A Contest between Models. Journal of Economic Growth, 7(1), pp. 43–56.
11. Borner, S. and Paldam, M. (1998) The Political Dimension of Economic Growth (New York: Palgrave Macmillan).
12. Breen, R. (1996) Regression Models: Censored, Sample Selected, or Truncated Data (Thousand Oaks: Sage Publications).
13. Campos, N.F. and Nugent, J.B. (2000) Who is Afraid of Political Instability. Journal of Development Economics 67, pp. 157–172.
14. Clague, C., Gleason, S. and Knack, S. (1996) Property and contract rights in autocracies and democracies. Journal of Economic Growth, 1, pp. 243–276.
15. de Haan, J. and Siermann, C.L.J. (1995) New evidence on the relationship between democracy and economic growth. Public Choice, 86, pp. 175–198.
16. de Haan, J. and Siermann, C.L.J. (1996) Political Instability, Freedom and Economic Growth: Some Further Evidence. Economic Development and Cultural Change, (44)2, pp. 339–350.
17. de Haan, J., Lundstrom, S. and Sturm, E. (2006) Market-oriented institutions and policies and economic growth: a critical survey. Journal of Economic Surveys, 20, pp. 157–181.
18. de Haan, J. (2007) Political institutions and economic growth reconsidered. Public Choice, 131, pp. 281–292.
19. Durlauf, S. and Quah, D. (1998). The New Empirics of Economic Growth. Discussion Paper 384, Centre for Economic Performance, London.
20. Farr, W.K., Lord, R.A. and Wolfenbarger J.L. (1998) Economic freedom, political freedom, and economic well-being: A causality analysis. Cato Journal, 18, pp. 247–262.
21. Fedderke, J. and Klitgaard, R. (1998) Economic Growth and Social Indicators: An Explanatory Analysis. Economic Development and Cultural Change, 46(3), pp. 455–490.
22. Friedman, M. (1962) Capitalism and freedom (Chicago: University of Chicago Press).
23. Gyimah-Brempong, K. and Traynor, T.L. (1999) Political Instability, Investment, and Economic Growth in Sub Saharan Africa. Journal of African Economies, 8(1), pp. 52–86.
24. Haggard, S. (1997) Democratic institutions and economic policy, in: C. Clague (ed.), Institutions and eco¬nomic development (Baltimore: Johns Hopkins University Press), pp. 121–152.
25. Keshk, O.M.G. (2003) CDSIMEQ: A program to implement two-stage probit least squares. Stata Journal, 3(2), pp. 157–167.
26. Kuznets, S. (1966) Modern Economic Growth: Rate, Structure, and Spread (New Haven: Yale University Press).
27. Kuznets, S. (1973) Modern Economic Growth: Findings and Reflections. American Economic Review, 63, pp. 247–258.
28. Kwasi, F.A. (1992) Political instability and economic growth: evidence from Sub-Saharan Africa. Economic Development and Cultural Change, 40(4), pp. 829–841.
29. Levine, R. and Renelt, D. (1991) Cross-country studies of growth and policy: methodological, conceptual, and statistical problems. Policy Research Working Paper Series 608, The World Bank.
30. Levine, R. and Renelt, D. (1992) A sensitivity analysis of cross-country growth regressions. American Economic Review, 82, pp. 942–963.
31. Maddala, G.S. (1983) Limited-Dependent and Qualitative Variables in Econometrics (Cambridge: Cambridge University Press).
32. Maddala, G.S. and Lee, L-F (1976) Recursive Models with Qualitative Endogenous Variables, NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 168–188 National Bureau of Economic Research, Inc.
33. Mansfield, E. (1991). Microeconomics: Theory and Application (New York: Norton & Company, Inc.).
34. Nelson, M.A. and Singh, R.D. (1998) Democracy, economic freedom, fiscal policy, and growth in LCDs: A fresh look. Economic Development and Cultural Change, 46, pp. 677–696.
35. Newey, W. (1987) Efficient estimation of limited dependent variable models with endogenous explanatory variables. Journal of Econometrics, 36, pp. 231–250.
36. North, D.C. (1990) Institutions, institutional change, and economic performance (New York: Cambridge University Press).
37. Pourgerami, A. (1988) The political economy of development: A cross-national causality test of development. Public Choice, 58, pp. 123–141.
38. Przeworski, A. and Limongi, F. (1993) Political regimes and economic growth. Journal of Economic Perspectives, 7, pp. 51–69.
39. Rodrik, D. (1998) Why do more open economies have bigger governments? Journal of Political Economy, 106, pp. 997–1032.
40. Rodrik, D. (1999). Where did all the growth go? External shocks, social conflict, and growth. Journal of Economic Growth, 4, pp. 385–412.
41. Roodman, D. (2011) Estimating fully observed recursive mixed-process models with cmp. Stata Journal, 11(2): 159–206.
42. Sachs, J.D. and Warner, A.M. (1995) Economic convergence and economic policies. NBER Working Paper 5039.
43. Sachs, J.D. and Warner, A.M. (1997) Fundamental Sources of Long-Run Growth. The American Economic Review 87(2), pp. 184–188.
44. Schneider, F. and Frey, B.S. (1985) Economic and political determinants of foreign direct investment. World Development, 13, pp. 161–175.
45. Scully, G.W. (1988) The institutional framework and economic development. Journal of Political Economy, 96, pp. 652–662.
46. Sen, A. (1999). Development as freedom (New York: Knopf).
47. Takayama, A. (1985). Mathematical Economics (Cambridge: Cambridge University Press).
48. Vasil, R. (2001). Governing Singapore: A history of national development and democracy (St. Leonards: Allen & Unwin).
49. Wu, W. and Davis, O.A. (1999) The two freedoms, economic growth and development: An empirical study. Public Choice, 100, pp. 39–64.
50. Xu, Z. and Li, H. (2008) Political freedom, economic freedom, and income convergence: Do stages of economic development matter? Public Choice, 135, pp. 183–205.
51. Yu, P.C. (2001) Democracy or Bust? The development dilemma. Harvard International Review, (23)3, pp. 36–39.
52. Zablotsky, E.E. (1996) Political Stability and Economic Growth. A two way relation. Universidad del CEMA, CEMA Working Papers: 109.