The Economics of State Fragmentation: Assessing the Economic Impact of Secession - Addendum

Jo Reynaerts and Jakob Vanschoonbeek

MPRA Paper from University Library of Munich, Germany

Abstract: Reynaerts and Vanschoonbeek (2016) propose a semi-parametric procedure to estimate the economic impact of secession, finding empirical evidence that declaring independence significantly lowered per capita GDP in newly formed states. To demonstrate that these findings appear to hold irrespective of the estimation procedure employed, this addendum formulates a parametric approach to estimate the independence dividend. Our preferred parametric specifications comprise a dynamic, quasi-myopic model of per capita GDP dynamics that controls for country and year fixed effects, the rich dynamics of GDP, finite anticipation effects and a vector of alternative growth determinants. The results indicate that declaring independence reduces per capita GDP by around 15-20% in the long run. These results are qualitatively confirmed when we use non-regional secession waves to instrument for local incentives to secede.

Keywords: Independence dividend; panel data; dynamic model; generalized method of moments; bootstrap-based bias correction; instrumental variable regression (search for similar items in EconPapers)
JEL-codes: C14 C32 H77 O47 (search for similar items in EconPapers)
Date: 2016-07-04
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: The economics of state fragmentation: Assessing the economic impact of secession - Addendum (2016)
Working Paper: The economics of state fragmentation: Assessing the economic impact of secession - Addendum (2016)
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