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Political Stability and Democratic Governance. A Panel Data Analysis

Author

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  • Georgiou, Militiades N.
  • Kyriazis, Nicholas
  • Economou, Emmanouel/Marios/Lazaros

Abstract

In the present paper we undertake to link democracy with a set of indicators for economic freedom and financial crises, using panel data analysis. The sample covers annually the period 2000-2012 for the EU, the USA and Japan. The results point out, that political stability is positively related to the set of economic freedom indicators and negatively to financial crises, because greater economic freedom influences positively investment and economic growth, while financial crises, which lead to austerity policies, which again lead to recession-depression, increases dissatisfaction of citizens with the working of democracy (Georgiou, 2011) and thus, to the rise of extremist parties. Our findings support the idea that democratic stability is linked to economic stability and growth and vice-versa.

Suggested Citation

  • Georgiou, Militiades N. & Kyriazis, Nicholas & Economou, Emmanouel/Marios/Lazaros, 2015. "Political Stability and Democratic Governance. A Panel Data Analysis," MPRA Paper 62978, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:62978
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    References listed on IDEAS

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    More about this item

    Keywords

    Democracy; economic freedom; financial crisis; panel data analysis.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative

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