Citation
Discussion Paper Details
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Full Details
Title: Democracy Doesn't Always Happen Over Night: Regime Change in Stages and Economic Growth
Author(s): Vanessa Boese and Markus Eberhardt
Publication Date: September 2021
Keyword(s): democracy, Difference-in-difference, growth, Interactive Fixed Effects and Political development
Programme Area(s): Macroeconomics and Growth and Political Economy
Abstract: How substantial are the economic benefits from democratic regime change? We argue that democratisation is not a discrete event but a two-stage process: autocracies first enter into 'episodes' of political liberalization; in the second stage, these episodes either culminate in regime change or not. Failure to account for this chronology and the implicit counterfactual groups risks biased estimates due to selection effects. Adopting a repeated-treatment difference-in-difference implementation, which captures non-parallel trends and selection into treatment, we find that a single event approach substantially underestimates the economic dividends from regime change and, crucially, obscures the permanent growth effect of democratisation.
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Bibliographic Reference
Boese, V and Eberhardt, M. 2021. 'Democracy Doesn't Always Happen Over Night: Regime Change in Stages and Economic Growth'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=16587