Democracy, Growth, Heterogeneity, and Robustness

Markus Eberhardt

No 16719, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 this assumption to confirm that in the long-run democracy has a positive average effect on per capita income of around 10%, adopting a range of alternative definitions for regime change in the form of binary indicators. Guided by existing hypotheses, additional analysis probes the patterns of the heterogeneous 'democratic dividend' across countries. A second common feature of this literature as well as cross-country growth empirics more generally is the absence of concerns for sample selection or influential observations. I carry out two rule-based robustness exercises to demonstrate that my empirical findings are highly robust to substantial changes to the sample.

Keywords: Democracy; Growth; Political development; Difference-in-difference estimator; Interactive fixed effects (search for similar items in EconPapers)
JEL-codes: O10 P16 (search for similar items in EconPapers)
Date: 2021-11
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Related works:
Journal Article: Democracy, growth, heterogeneity, and robustness (2022)
Working Paper: Democracy, growth, heterogeneity, and robustness (2021)
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