The Dynamic Effect of Social and Political Instability on Output: The Role of Reforms
IMF Working Papers, April 23, 2013
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Bibliographic details
- Authors: Lorenzo E. Bernal-Verdugo, Davide Furceri, Dominique M. Guillaume
- Published: April 23, 2013
- Series: IMF Working Papers
Summary
- Aim: analyze the dynamic effect of social and political instability on output.
- Sample: panel of up to 183 countries from 1980 to 2010.
- Central findings:
- Social conflicts have a significant and negative impact on output in the short-term.
- The magnitude of the short-term effect is a function of the intensity of political instability.
- Medium-term recovery of output depends on the ability to implement, in the aftermath of a social instability episode, reforms aimed at improving the level of governance.
- Robustness: results are robust to different checks and estimation strategies.
Methodology and Scope
- Data: panel dataset covering up to 183 countries.
- Time period: 1980 to 2010.
- Series/Issue: Working Paper No. 2013/091.
Key Findings (enumerated)
- Short-term effects:
- Social conflicts cause a significant and negative impact on output.
- Magnitude varies with intensity of political instability.
- Medium-term dynamics:
- Recovery of output conditional on post-conflict implementation of governance-improving reforms.
- Robustness checks:
- Results hold across different checks and estimation strategies reported in the paper.
Policy Implications and Recommendations
- Prioritize implementation of reforms aimed at improving the level of governance in the aftermath of social instability episodes to facilitate medium-term output recovery.
- Monitor intensity of political instability to assess expected short-term output losses and tailor stabilization policies accordingly.