American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Democratic Capital: The Nexus of Political and Economic Change
American Economic Journal: Macroeconomics
vol. 1,
no. 2, July 2009
(pp. 88–126)
Abstract
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. (JEL D72, I31, N10, N40, O47)Citation
Persson, Torsten, and Guido Tabellini. 2009. "Democratic Capital: The Nexus of Political and Economic Change." American Economic Journal: Macroeconomics 1 (2): 88–126. DOI: 10.1257/mac.1.2.88Additional Materials
JEL Classification
- D72 Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
- O47 Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- I31 General Welfare
- N10 Economic History: Macroeconomics and Monetary Economics; Growth and Fluctuations: General, International, or Comparative
- N40 Economic History: Government, War, Law, and Regulation: General, International, or Comparative