Chapter 2 Commodity Price Volatility, Democracy, and Economic Growth

Rabah Arezki and Thorvaldur Gylfason

A chapter in Economic Growth and Development, 2011, pp 9-24 from Emerald Group Publishing Limited

Abstract: We use a new dataset on nonresource GDP to examine the impact of commodity price volatility on economic growth in a panel of up to 158 countries during the period 1970–2007. Our main finding is that commodity price volatility leads to a significant increase in nonresource GDP growth in democracies, but to no significant increase in autocracies. To explain this result, we show that increased commodity price volatility leads to a statistically significant and quantitatively large increase in net national saving in democracies. In autocracies, on the contrary, net national saving decreased significantly. Our results hold true when using indicators capturing the quality of economic institutions in lieu of indicators of political institutions.

Keywords: Commodity prices; volatility; democracy; economic growth (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:eme:fegzzz:s1574-8715(2011)0000011007

DOI: 10.1108/S1574-8715(2011)0000011007

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