IMF Working Papers

Political Institutions and Output Collapses

By Patrick A. Imam, Jonathan R. W. Temple

February 17, 2023

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Patrick A. Imam, and Jonathan R. W. Temple Political Institutions and Output Collapses, (USA: International Monetary Fund, 2023) accessed November 8, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Keywords: Autocracy, Democracy, Economic growth

Publication Details

  • Pages:

    60

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2023/036

  • Stock No:

    WPIEA2023036

  • ISBN:

    9798400225802

  • ISSN:

    1018-5941