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Democracy, growth, heterogeneity, and robustness

Eberhardt, Markus

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Abstract

I motivate and empirically investigate differential long-run growth effects of democratisation across countries. While the existing literature recognises the potential for such heterogeneity, empirical implementations to date unanimously assume a common democracy-growth nexus across countries. Adopting novel methods for causal inference in policy evaluation I relax the homogeneity assumption. My results confirm that in the long-run democracy has a positive and significant average effect on per capita income, albeit at 10% this is at best half the magnitude of recent estimates in the literature. Guided by existing theories, additional analysis probes the patterns of the heterogeneous ‘democratic dividend’ across countries. Adopting two rule-based robustness exercises I furthermore demonstrate that, in contrast to recent contributions to the literature, my approach yields empirical findings that are robust to substantial changes to the sample.

Citation

Eberhardt, M. (2022). Democracy, growth, heterogeneity, and robustness. European Economic Review, 147, Article 104173. https://doi.org/10.1016/j.euroecorev.2022.104173

Journal Article Type Article
Acceptance Date Apr 21, 2022
Online Publication Date Jun 14, 2022
Publication Date Aug 1, 2022
Deposit Date Apr 26, 2022
Publicly Available Date Mar 28, 2024
Journal European Economic Review
Print ISSN 0014-2921
Publisher Elsevier BV
Peer Reviewed Peer Reviewed
Volume 147
Article Number 104173
DOI https://doi.org/10.1016/j.euroecorev.2022.104173
Keywords Economics and Econometrics; Finance
Public URL https://nottingham-repository.worktribe.com/output/7833045
Publisher URL https://www.sciencedirect.com/science/article/pii/S0014292122000976

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