DP13659 Democracy Does Cause Growth: Comment

Author(s): Markus Eberhardt
Publication Date: April 2019
Keyword(s): democracy, Difference-in-Difference Estimator, growth, Interactive Fixed Effects, Political development, Spillovers
JEL(s): O10, P16
Programme Areas: Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13659

I revisit the causal relationship between democracy and growth as recently studied in Acemoglu, Naidu, Restrepo, and Robinson (2019, ANRR). I demonstrate the sensitivity of their results to sample selection by dropping a small number of observations in a non-random fashion and use these findings to motivate a generalisation of their empirical approach. My own analysis relaxes the assumption of (i) a common democracy-growth relationship, and of (ii) the absence of strong cross-section correlation. Adopting novel methods for policy evaluation I find a robust positive long-run effect of democracy albeit with only around half the magnitude of that found in ANRR.