Commodity Price Volatility, Democracy and Economic Growth

Rabah Arezki and Thorvaldur Gylfason

No 3619, CESifo Working Paper Series from CESifo

Abstract: We use a new dataset on non-resource 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 non-resource 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 other hand, 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)
JEL-codes: D63 D74 F32 Q33 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3619

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