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Democratic capital: the nexus of political and economic change

Persson, Torsten and Tabellini, Guido (2009) Democratic capital: the nexus of political and economic change. American Economic Journal: Macroeconomics, 1 (2). pp. 88-126. ISSN 1945-7707

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Identification Number: 10.1257/mac.1.2.88


We study the dynamics of economic and political change, theoretically and empirically. Democratic capital measured by a nation's historical experience with democracy, and the incidence of democracy in its neighborhood, appears to reduce exit rates from democracy and raise exit rates from autocracy. Higher democratic capital stimulates growth by increasing the stability of democracies. Heterogeneous effects of democracy induce sorting of countries into political regimes, which helps explain systematic differences between democracies and autocracies. Our results suggest the possibility of a virtuous circle, where accumulation of physical and democratic capital reinforce each other, promoting economic development and consolidation of democracy.

Item Type: Article
Official URL:
Additional Information: © 2009 American Economic Association
Subjects: H Social Sciences > HB Economic Theory
J Political Science > JC Political theory
Sets: Departments > Economics
Collections > Economists Online
Date Deposited: 20 Feb 2012 17:01
Last Modified: 02 Jun 2014 09:11

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