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Forms of democracy and economic growth volatility

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  • Mathonnat, Clément
  • Minea, Alexandru
Abstract
Using a panel of 140 countries over the 1975–2007 period, we disaggregate democracies across five institutional dimensions (government forms, electoral rules, state forms, number of veto players, and age of democracies), to study the precise forms of democracy that may explain the lower economic growth volatility (EGV) in democracies compared to dictatorships, usually emphasized by the literature. We find that, while all government forms decrease EGV to the same extent, proportional electoral rules outperform majoritarian and mixed electoral rules, suggesting a role for a more inclusive political decision-making process. In addition, EGV is significantly lower in unitary states, suggesting a role for a limited separation of power between the central government and the local authorities, while the effect of the number of veto players and the age of democracies is significant only in developed countries. Consequently, the choice between various forms of democracy may not be neutral for EGV, and, possibly, for countries' development path.

Suggested Citation

  • Mathonnat, Clément & Minea, Alexandru, 2019. "Forms of democracy and economic growth volatility," Economic Modelling, Elsevier, vol. 81(C), pages 594-603.
  • Handle: RePEc:eee:ecmode:v:81:y:2019:i:c:p:594-603
    DOI: 10.1016/j.econmod.2018.07.013
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    5. Oleksii Lyulyov & Tetyana Pimonenko & Natalia Stoyanets & Nataliia Letunovska, 2019. "Sustainable Development of Agricultural Sector: Democratic Profile Impact Among Developing Countries," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(4), pages 97-105, December.
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    7. Jacques Simon Song, 2021. "Le rôle des clivages des partis politiques dans le renforcement de la démocratie en Afrique," African Development Review, African Development Bank, vol. 33(1), pages 91-103, March.
    8. Abosedra, Salah & Arayssi, Mahmoud & Ben Sita, Bernard & Mutshinda, Crispin, 2020. "Exploring GDP growth volatility spillovers across countries," Economic Modelling, Elsevier, vol. 89(C), pages 577-589.

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    More about this item

    Keywords

    Forms of democracy; Economic growth volatility; Economic development;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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