Political Institutions and Economic Volatility

Type Working Paper
Title Political Institutions and Economic Volatility
Publication (Day/Month/Year) 2008
URL https://www.researchgate.net/profile/Jakob_Haan/publication/223415684_Political_Institutions_and_Eco​nomic_Volatility/links/00463517e6576b309d000000.pdf
We examine the effect of political institutions on economic growth volatility, using data 95 countries over the period 1960-2005, taking into account various control variables as suggested in previous studies. Our indicator of volatility is the relative standard deviation of the growth rate of GDP per capita. The results of a heterogenous dynamic panel model indicate that democracy is negatively related to economic volatility. We also find that some dimensions of political instability and policy uncertainty increase economic volatility.

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