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 December 22, 2024

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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