The impact of political instability on economic growth: the case of Guyana

Sukrishnalall Pasha

MPRA Paper from University Library of Munich, Germany

Abstract: This paper empirically probes the nexus between political instability and economic growth in Guyana using time-series data covering the period 1961 – 2018 and GARCH (1,1) models. The results show that changes in the Head of State (HOS) exert a positive and significant impact on real GDP growth rates, while strikes have the opposite effect on economic growth. Other proxies of political instability, such as political assassinations, riots, insurrection, and terrorism, are not significantly related to growth in real GDP because of the dispersed nature of economic activities and their negligible effect on production and productivity. When the proxies of political instability are added to the conditional variance equation, the results indicate that only changes in Head of State (HOS) moderate volatility in growth rates. This is probably due to transitory goodwill enjoyed by the incoming Head of State that serves to dampen ethnic tensions, reducing instability. The latter result indicates the importance of democratic turnover.

Keywords: Economic growth; GARCH (1; 1); Guyana; political instability (search for similar items in EconPapers)
JEL-codes: O47 (search for similar items in EconPapers)
Date: 2020-09-27
New Economics Papers: this item is included in nep-gro and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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