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Political Instability and Growth in Dictatorships

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  • Spagat, Michael
  • Simons, Kenneth L
  • Overland, Jody

Abstract

We model growth in dictatorships facing each period an endogenous probability of ‘political catastrophe’ that would extinguish the regime's wealth extraction ability. Domestic capital exhibits a bifurcation point determining economic growth or shrinkage. With low initial domestic capital the dictator plunders the country's resources and the economy shrinks. With high initial domestic capital the economy eventually grows faster than is socially optimal.

Suggested Citation

  • Spagat, Michael & Simons, Kenneth L & Overland, Jody, 2000. "Political Instability and Growth in Dictatorships," CEPR Discussion Papers 2653, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2653
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    More about this item

    Keywords

    Political economy; Growth; Dictatorship; Bifurcations;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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