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A farewell to critical junctures: Sorting out long-run causality of income and democracy

Erich Gundlach () and Martin Paldam

Economics Working Papers from Department of Economics and Business Economics, Aarhus University

Abstract: We consider the empirical relevance of two opposing hypotheses on the causality between income and democracy: The Democratic Transition claims that rising incomes cause a transi¬ tion to democracy, whereas the Critical Junctures hypothesis denies this causal relation. Our empirical strategy is justified by Unified Growth Theory, which hypothe¬sizes that the present international income differences have roots in the prehistoric past. Thus, we use prehistoric measures of biogeography as instruments for modern income levels, and find a large long-run causal effect of income on the degree of democracy. This result rejects the Critical Junctures hypothesis, which is an important part of the Primacy of Institutions view.

Keywords: Long-run growth; democracy; unified growth theory; biogeography (search for similar items in EconPapers)
JEL-codes: B25 O1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-pol
Date: 2008-02-18
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Journal Article: A farewell to critical junctures: Sorting out long-run causality of income and democracy (2009) Downloads
Working Paper: A farewell to critical junctures: Sorting out long-run causality of income and democracy (2008) Downloads
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