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Democracy and the quality of economic institutions: theory and evidence

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  • Tommy Krieger

    (ZEW – Leibniz-Centre for European Economic Research)

Abstract

We present a simple model, illustrating how democracy may improve the quality of the economic institutions. The model further suggests that institutional quality varies more across autocracies than across democracy and that the positive effect of democracies on economic institutional quality increases in people’s human capital. Using a panel data set that covers 150 countries and the period from 1920 to 2019, and different measures of economic institutional quality, we show results from fixed effect and instrumental variable regressions that are in line with the predictions of our model.

Suggested Citation

  • Tommy Krieger, 2022. "Democracy and the quality of economic institutions: theory and evidence," Public Choice, Springer, vol. 192(3), pages 357-376, September.
    • Handle: RePEc:kap:pubcho:v:192:y:2022:i:3:d:10.1007_s11127-022-00990-6
    DOI: 10.1007/s11127-022-00990-6
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    Cited by:

    1. Lars Pelke, 2023. "Reanalysing the link between democracy and economic development," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 26(4), pages 361-383, December.

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    More about this item

    Keywords

    Democracy; Development; Economic institutions; Human capital; Political economy; Political transitions;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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