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Fighting inflation in developing countries: Does democracy help? An empirical investigation

Author

Listed:
  • Abdoul' Ganiou Mijiyawa

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

Abstract

Using the date of independence as an instrument for democratic institutions, and data over the period 1960-2003, I find a positive and significant effect of democracy on inflation in a sample of 62 developing countries. Democracy increases inflation because democracy stimulates money creation and compromises trade liberalisation. When I exclude Latin American countries from my sample, democracy has a positive but insignificant effect on inflation. This suggests that the significant effect of democracy is due to Latin American countries experiences. Thus, my results reconcile two views: one that 'populist democracy' is a Latin American phenomenon; and the other that democracy does not necessarily induce better macroeconomic management in developing countries.

Suggested Citation

  • Abdoul' Ganiou Mijiyawa, 2011. "Fighting inflation in developing countries: Does democracy help? An empirical investigation," Post-Print halshs-00628423, HAL.
    • Handle: RePEc:hal:journl:halshs-00628423
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    Cited by:

    1. Omgba, Luc Désiré, 2015. "Why Do Some Oil-Producing Countries Succeed in Democracy While Others Fail?," World Development, Elsevier, vol. 76(C), pages 180-189.

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