Cover IMF Working Papers
Political Institutions and Output Collapses
Author:
Patrick A. Imam
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Jonathan R. W. Temple
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Series:
IMF Working Papers
Volume/Issue:
Volume 2023: Issue 036
Language:
English
Publication Date:
17 Feb 2023
DOI:
https://doi.org/10.5089/9798400225802.001
ISBN:
9798400225802
ISSN:
1018-5941
Pages:
60
Keywords:
Economic growth; autocracy; democracy
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Major output collapses are costly and frequent in the developing world. Using cross-country data, we classify five-year periods using a two-dimensional state space based on growth regimes and political institutions. We then model the joint evolution of output growth and political institutions as a finite state Markov chain, and study how countries move between states. We find that growth is more likely to be sustained under democracy than under autocracy; output collapses are more persistent under autocracy; and stagnation under autocracy can give way to outright collapse. Democratic countries appear to be more resilient.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2023: Issue 036