Business Cycles with Revolutions

Lance Kent () and Toan Phan

No 145, Working Papers from Department of Economics, College of William and Mary

Abstract: This paper develops an empirical macroeconomic framework to analyze the relationship between major political disruptions and business cycles of a country. We combine a new dataset of political revolutions (mass domestic political campaigns to remove dictators and juntas) across the world since 1960, with coup data and traditional macro data (of output, investment, trade, inflation and exchange rate). We then build a panel vector-autoregression model with two novel ingredients: (1) political disruptions and (2) an estimated probability of such disruptions. We find that both terms have statistically and economically significant impacts on business cycles. Interestingly, the impacts of the second term dominate those of the first, both statistically and economically. This suggests that our measure of political risk captures an important source of time-varying uncertainty and volatility in many countries.

Keywords: business cycles; political risk; time-varying uncertainty; panel VAR (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013-11-05
New Economics Papers: this item is included in nep-mac, nep-pol and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://economics.wm.edu/wp/cwm_wp145.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cwm:wpaper:145

Access Statistics for this paper

More papers in Working Papers from Department of Economics, College of William and Mary Contact information at EDIRC.
Bibliographic data for series maintained by Daifeng He ( this e-mail address is bad, please contact ) and Alfredo Pereira ().