Revolutions as structural breaks: the long-term economic and institutional consequences of the 1979 Iranian Revolution

Nuno Garoupa () and Rok Spruk ()
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Nuno Garoupa: George Mason University
Rok Spruk: University of Ljubljana

Constitutional Political Economy, 2025, vol. 36, issue 3, No 2, 273-301

Abstract: Abstract This paper examines whether major political institutional disruptions produce temporary shocks or structural breaks in long-term development. Using the 1979 Iranian Revolution as a natural experiment, we apply the synthetic control method to estimate its causal effect on economic growth and institutional quality. Drawing on a panel of 66 countries from 1950 to 2015, we construct counterfactual trajectories for Iran in the absence of revolutionary change. Our results show a persistent and statistically significant divergence in per capita GDP, institutional quality, and legal constraints on executive power. We perform in-space and in-time placebo tests to rule out confounding events, such as the Iran-Iraq War and international sanctions, and propose confidence interval estimation to address uncertainty in treatment effects. The findings identify the Iranian Revolution as a structural institutional rupture, with implications for the classification of institutional change more broadly. We contribute a generalizable empirical framework for distinguishing between temporary and structural institutional shocks in long-run development.

Keywords: Synthetic control method; Institutional change; long-run development; Iran; N10; O10; O43; O47; O57 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10602-025-09471-6

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