Coups,regime transitions,and institutional consequences

Coups and regime transitions are events that typically are intended to change the basic institutional framework of a country. Which specific institutions change and the consequences of these changes nevertheless remains largely unknown. Change after a coup or transition implies that some form of political or judiciary barrier has been erected or removed. We therefore focus on what happens to the quality of judicial institutions and political corruption around coup attempts and other types of regime transitions. We hypothesize that when coups are conducted by members of the incumbent political elite, they are likely to remove barriers to change while coup makers outside of the ruling elite are more likely to do the opposite and thus protect themselves from what remains of the elite in the political system. Using the new Bjørnskov-Rode coup dataset, our results suggest that successful coups are associated with degradation of institutions, with successful military coups in particular having a significant negative effect. Results are more varied for civilian coups where we find indications of differences depending on whether the coup makers are part of a political elite or not. We also explore whether the incumbent regime influences the effect of coup attempts on institutional change.     

Rent extraction,revolutionary threat,and coups in non-democracies

This paper studies the political turnover process in autocracies due to coup d’états. We present a model in which autocratic rulers are politically constrained both by the elite and by the street. These political constraints are inter-related such that when leaders extract rent from the economy on behalf of the elite they increase the probability of facing a revolt in the street. We suppose that rulers differ in the efficiency with which they extract rents and citizens make inferences about the ruler’s type when idiosyncratic shocks occur. Equilibria are characterized in which elite-led coups serve to reset citizens’ beliefs about the leader’s type and pre-empt revolutions during periods of popular unrest. We then investigate the empirical implications using panel data on popular unrest and coups in sub-Saharan Africa. OLS and IV estimates support the causal mechanism highlighted in our theory. The magnitude of the effect is substantial – a one standard deviation increase in protest intensity increases the probability a coup occurs by a factor of almost three in our baseline IV specification.     

Differences matter: The effect of coup types on physical integrity rights

What is the effect of coups d’état on repression? Do ‘bad’ coups against democracies decrease respect for physical integrity rights? Does it make a difference whether a coup d’état is staged by the military or a civilian leader? We argue that the impact of coups on repression varies with regime type as this determines the relative costs of repression and buying political support. Combining updated panel datasets on democracy and coups d’état from 1960 to 2010, we provide an analysis of the effects of coups on physical integrity rights, differentiating post-coup regime type. We find that post-coup respect for physical integrity rights decreases when non-democratic regimes depose democratic regimes through a coup d’état - an effect which is fading over time. As opposed to military autocracies, civilian-led regimes are more repressive in the year after successfully ousting the previous government. Together with supplementary findings on democracy-inducing and failed coups, our findings show that differences in regime types do matter in research of coups d’état.     

Income, income inequality, and health: Evidence from China

This paper tests using survey data from China whether individual health is associated with income and community-level income inequality. Although poor health and high inequality are key features of many developing countries, most of the earlier literature has drawn on data from developed countries in studying the association between the two. We find that self-reported health status increases with per capita income, but at a decreasing rate. Controlling for per capita income, we find an inverted-U association between self-reported health status and income inequality, which suggests that high inequality in a community poses threats to health. We also find that high inequality increases the probability of health-compromising behavior such as smoking and alcohol consumption. Most of our findings are robust to different measures of health status and income inequality. Journal of Comparative Economics 34 (4) (2006) 668–693.     

Growth, Attitudes towards Women, and Women's Welfare

The authors find that attitudes towards women are more progressive as per capita income rises and that the quality and quantity of women's human capital increases with per capita income. Prior to presenting these empirical results, the authors first demonstrate the importance of these relationships with a simple model that shows how a feedback loop between attitudes towards women, investment in women's human capital, and income affects the dynamic path of the economy. Depending on the nature of the relationship between per capita income and attitudes towards women, they identify the possibility of a gender-equity poverty trap. Finally, they extend the model to show the dynamic interplay between attitudes towards women, income, and fertility.     

On poverty traps,thresholds and take-offs

Recent studies on economic growth focus on persistent inequality across countries. In this paper we study mechanisms that may give rise to such persistent inequality. We consider countries that accumulate capital in order to increase the per capita income in the long run. We show that the long-run growth dynamics of those countries can generate a twin-peak distribution of per capita income. The twin-peak distribution is caused by (1) locally increasing returns to scale and (2) capital market constraints. These two forces give rise to a twin-peaked distribution of per capita income in the long run. In our model investment decisions are separated from consumption decisions and we thus do not have to consider preferences. Empirical evidence in support of a twin-peak distribution of per capita income is provided.     

Financial Openness,Aggregate Consumption and Threshold Effects

We analyse the influence of financial openness on the level of aggregate consumption, a research question that has been left surprisingly unexplored by the previous literature. We construct a complete and balanced panel data set of 88 countries for the period 1980–2010, and then differentiate between four groups of countries. Models for non‐stationary heterogeneous panels, as well as panel threshold regression models, are used to estimate the determinants of aggregate consumption. The core finding of the paper is that the financial openness effect on consumption changes in the course of economic development, with the level or per capita income acting as a threshold which is consistently estimated within the model. The openness effect is non‐homogeneous across groups, stronger for low levels of per capita income and diminishes as income rises. These findings provide new insights into the welfare effect of financial liberalization.     

Skill Composition,Fertility, and Economic Growth

While high fertility persists in the poorest countries and fertility declines with per capita income in developing countries, fertility and per capita income are now positively associated across most developed countries. This paper presents a model where a U‐shaped relationship between overall fertility and per capita income reflects within country differences in workforce skill composition and household choice of occupation, fertility, and childrearing. The fraction of skilled workers rises with economic growth. By allowing for both differences in the fertility of skilled and unskilled workers and purchased childrearing inputs, we explain a poverty trap with high fertility, fertility decline with economic development, and the possible reversal of fertility decline in a developed economy where most workers are skilled.     

Jointly determined saving and fertility behaviour: theory,and estimates for Germany,Italy, UK and USA

This study uses new theories of capital accumulation and fertility in a comparative framework to test predictions with time-series data for Germany, Italy, the UK, and the US. The exogenous-fertility model is based on models of Barro and Becker. The endogenous-fertility models are based on models of Veall and Nishimura and Zhang. It is assumed that life cycle periods are youth, middle age, and old age. Several theoretical frameworks are tested with endogenous and exogenous fertility and altruism and nonaltruism. Data are obtained during 1950-90. Dependent variables are the total lifetime fertility rate and real per capita household savings. Explanatory variables include social security, the real social security deficit per capita, the real rate of interest, the real per capita disposable income, the average male real wage rate, the average female real wage rate, and the real child benefit rate. The explanatory variables are individually graphed to show differences by country over time. Findings suggest that fertility is endogenous in a nonaltruistic model. The only model not rejected by the data was the model in which fertility and intergenerational transfers were explained by nonaltruistic concerns. Fertility was positively affected by the male wage rate in all countries. Fertility was negatively affected by the female wage rate in all countries. Disposable income was insignificant in the UK and Germany and positive and significant in Italy and the US. The interest rate was significant in only 1 model. Child benefits had a positive and significant effect on fertility in the UK. In savings models, disposable income was significant and positive, and child benefits and wage rates were insignificant. Social security coverage had a negative effect on fertility and a positive effect on savings, except in Germany. Findings indicate that saving and fertility are jointly determined.     

Uncertainty, Insurance, and Division of Labor

This paper develops an equilibrium model to investigate the relationships between transaction uncertainties, risk aversion, insurance, specialization, per capita real income, and productivity progress. It is shown that transaction uncertainties can restrict the division of labor; the level of division of labor decreases with the degree of risk aversion; insurance will promote the equilibrium level of division of labor, per capita real income, and productivity.     

Income distribution dynamics across European regions: Re-examining the role of space

This paper is aimed at exploring the role played by space on the dynamics of regional per capita income disparities in Europe between 1980 and 2005. To do that, an analysis based on the so-called distribution dynamics approach is used as benchmark. Therefore, the external shape of the per capita income distribution and movements within it are examined using both continuous and discrete techniques. This first approach reveals that regional disparities across European regions have decreased over time and, based on the computation of a mobility index, also highlights the existence of a medium mobility degree within the distribution. Subsequently, a spatially conditioned distribution dynamics approach is developed to adequately assess the spatial dimension of the convergence process. In this new approach per capita income of each region is doubly conditioned on its per capita income and the per capita income of its neighbours, both in a previous period. Additionally, a novel mobility index on the basis of a spatial Markov chains approach is devised. The results illustrate the importance of geography in explaining regional per capita income evolution; in particular it is shown that poor regions surrounded by rich regions have a much higher probability of escaping the poverty trap than other poor regions.     

Income inequality and export prices across countries

This paper provides theory and evidence on the links between income inequality within a destination country and the patterns of trade and export prices. The theoretical framework relates income inequality to product quality and prices using a simple demand composition effect. The model predicts that a more unequal income distribution in a destination country leads to higher average prices, though the effect is nonlinear and disappears for rich enough countries. The predictions are tested using detailed firm‐level data. Controlling for income per capita, prices are systematically higher in more unequal destinations, and the strength of this effect depends on income per capita. Results are particularly important for middle‐income countries and hold only for differentiated goods, and in particular for products with a high degree of vertical differentiation.     

Air Pollution and ‘Dirty’ Industries: How and Why Does the Composition of Manufacturing Output Change with Economic Development?

This paper examines the impact on air pollution ofchanges in the composition of manufacturing output indeveloped and developing countries. Pollutionemissions from manufacturing output are estimated ina manner which holds constant the effect of technologyand regulations allowing the impact of compositional changes alone on pollution to beestimated. The paper has three main findings; (1) theinverted-U estimated between per capita income and thepollution intensity of GDP arises due to both thecomposition of manufacturing becoming cleaner and theshare of manufacturing output in GDP falling.Compositional changes alone are not responsible forthe inverted-U between per capita income and percapita emissions; (2) changes to the composition ofmanufacturing output are consistent with the pollutionhaven hypothesis, however there is clear evidence thatrising per capita incomes are associated with afalling income elasticity of demand for `dirty'products. This fact may explain the compositionalchanges that occur with development; (3) in additionto the income elasticity effect, the analysis suggeststhat land prices and to a lesser extent the prices oflabour and capital, determine the proportion of dirtyindustry within a country's manufacturing sector.     

Social capital, innovation and growth: Evidence from Europe

This paper investigates the interplay between social capital, innovation and per capita income growth in the European Union. We model and identify innovation as an important mechanism that transforms social capital into higher income levels. In an empirical investigation of 102 European regions in the period 1990-2002, we show that higher innovation performance is conducive to per capita income growth and that social capital affects this growth indirectly by fostering innovation. Our estimates suggest that there is no direct role for social capital to foster per capita income growth in our sample of European Union countries.     

Do Natural Resources Depress Income Per Capita?

Most evidence for the resource curse comes from cross‐country growth regressions suffers from bias originating from the high and ever‐evolving volatility in commodity prices. These issues are addressed by providing new cross‐country empirical evidence for the effect of resources in income per capita. Natural resource dependence (resource exports) has a significant negative effect on income per capita, especially in countries with bad rule of law or bad policies, but these results weaken substantially once we allow for endogeneity. However, the more exogenous measure of resource abundance (stock of natural capital) has a significant negative effect on income per capita even after controlling for geography, rule of law and de facto or de jure trade openness. Furthermore, this effect is more severe for countries that have little de jure trade openness. These results are robust to using alternative measures of institutional quality (expropriation and corruption instead of rule of law).     

The stork, the plow, rural social structure and tropical deforestation in poor countries?

This study is an exploration of the relationships between income, demographic pressure, technological change in agriculture, and the structure of political economies in light of cross-country differences in deforestation. The study focuses on small farmers and shifting cultivation. The analysis is based on a model developed by Larson (1994) that accounts for rural poverty, rootlessness, and distribution of landholdings. Regression equations model the average annual rate of deforestation, the relative area under forests, and a recursive model that includes both the deforestation rate and the forested area. Deforestation was reasonably well explained by a dummy variable for Asia, a rank order variable of the amount of forested area in 1980, the gross domestic product per capita in 1990, the average annual population growth rate during 1981-90, and the percentage increase in value added to agriculture during 1981-90 in 1990 dollars. Findings indicate that a 10% increase in the population growth rate increased the rate of deforestation by 10.6%. A 10% increase in income per capita increased deforestation by 49.5%. The influence of income on deforestation followed Kuznet's U-shaped curve. The turning point for reduced deforestation was income of $3500 per capita. Only Central and South America are near this income level. An increase in 1 agricultural worker per household increased deforestation by 50%. A 10% increase in smallholders' share of agricultural land reduced deforestation by 3.4%. Countries with high rural rootlessness had 23.6% less relative area under forests, suggesting that rural rootlessness rather than poverty per se leads to deforestation. The recursive model shows that demographic pressures led to deforestation and were mediated by technological change. Political economy theories of deforestation received strong empirical support.     

Inequality and economic growth: the role of initial income

We estimate a panel model where the relationship between inequality and GDP per capita growth depends on countries’ initial incomes. Estimates of the model show that the relationship between inequality and GDP per capita growth is significantly decreasing in countries’ initial incomes. Results from instrumental variables regressions show that in Low Income Countries transitional growth is boosted by greater income inequality. In High Income Countries inequality has a significant negative effect on transitional growth. For the median country in the world, that in the year 2015 had a PPP GDP per capita of around 10000USD, IV estimates predict that a 1 percentage point increase in the Gini coefficient decreases GDP per capita growth over a 5-year period by over 1 percentage point; the long-run effect on the level of GDP per capita is around ??5%.     

Inequality and income: The mediating effects of social spending and risk

This paper estimates models of social spending, income risk, and per capita income levels using data from a post-war panel of OECD (Organisation for Economic Cooperation and Development) countries. The objective is to test two theories about the pathway from inequality to per capita income. According to one theory, inequality reduces incomes because it induces social spending, which acts as a drag on the economy. The results here suggest, however, that inequality does not seem to induce social spending, and social spending does not seem to lower per capita incomes. According to a second theory, inequality causes upheaval which adds to the volatility of per capita income, which may reduce the level of per capita income. The results suggest, however, that volatility, measured here as the standard deviation of per capita income, has little measurable impact on either per capita income or social spending. The mainsprings of per capita income are more likely to be the traditional factors: the work force, human capital, and physical capital.
JEL classification: E6.     

The non-linear effects of life expectancy on economic growth

This paper shows that improvements in life expectancy (LE) had a non-linear effect on income per capita over the 1940-1980 period as this effect was conditional on each country’s initial level of LE. Whereas higher LE had an initial statistically significant negative impact on income per capita in countries with LE under 43 years in 1940, the opposite is true in countries with initial LE over 53 years.     

Technological Progress,Income Distribution,and The Explanation of Some Stylized Facts of Economic Growth

This paper examines the effects of technological progress in the framework of a specific-factor variant of the “dependent economy” model. We analyse, first, the effects of technological progress on income distribution, and secondly, its effects on commodity prices, and the structure of production. Our model predicts that, services must be more expensive in the country with higher per capita GDP, and that labor productivity in manufactures is positives associated with the per capita income, etc. The model can also explain several other stylized facts of economic growth. [O33, F11]