Political institutions and economic volatility |
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Authors: | Jeroen Klomp Jakob de Haan |
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Institution: | aUniversity of Groningen, Faculty of Economics and Business, PO Box 800, 9700 AV Groningen, The Netherlands;bCESifo, Munich, Germany |
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Abstract: | We examine the effect of political ‘institutions’ on economic growth volatility, using data from more than 100 countries over the period 1960 to 2005, taking into account various control variables as suggested in previous studies. Our indicator of volatility is the relative standard deviation of the growth rate of GDP per capita. The results of a dynamic panel model indicate that democracy reduces economic volatility. We also find that some dimensions of political instability and policy uncertainty increase economic volatility. |
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Keywords: | Economic volatility Political regime Dynamic panel model |
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