Forms of Democracies and Macroeconomic Volatility: An Exploration of the Political Institutions Black-Box

Clément Mathonnat () and Alexandru Minea
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Clément Mathonnat: CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique

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Abstract: Although the empirical literature on the determinants of economic growth volatility highlights a robust stabilizing effect of democratic regimes compared to dictatorships, no study focused so far on identifying the precise political institutions explaining this stabilizing effect. We open the political institutions black-box associated to democratic regimes, and study the effects of disaggregated political institutions on macroeconomic volatility along five institutional dimensions, namely forms of government, electoral rules, state forms, the number of veto players, and the age of democracies. Using a large panel of 140 countries over 1975-2007, we show that institutional details are of crucial importance, since the stabilizing effect of democracies depends on the precise institutional dimensions at work. Thus, our study contributes to the institutional design debate, by showing that the simple promotion of democratic regimes might not be sufficient to foster a more stable development path.

Keywords: Economic Development; Political Institutions; Macroeconomic Volatility; Positive Constitutional Economics; Comparative Politics (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-his, nep-pke and nep-pol
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Published in Economic Modelling, inPress

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