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Political Institutions and Output Collapses

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  • Patrick A. Imam
  • Jonathan R. W. Temple

Abstract

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.

Suggested Citation

  • Patrick A. Imam & Jonathan R. W. Temple, 2023. "Political Institutions and Output Collapses," IMF Working Papers 2023/036, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2023/036
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    Cited by:

    1. Mountford, Andrew, 2022. "Economic Growth Analysis When Balanced Growth Paths May Be Time Varying," MPRA Paper 114249, University Library of Munich, Germany.
    2. Millemaci, Emanuele & Monteforte, Fabio & Temple, Jonathan R. W., 2023. "Have autocrats governed for the long term?," SocArXiv w8khb, Center for Open Science.
    3. Itai Ater & Itzchak Tzachi Raz & Yannay Spitzer, 2023. "The Economic Consequences Of Democratic Backsliding Israel'S Judicial Overhaul," Israel Economic Review, Bank of Israel, vol. 21(2), pages 77-138, December.

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    Keywords

    Economic growth; autocracy; democracy;
    All these keywords.

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