DP2653 Political Instability and Growth in Dictatorships
|Author(s):||Jody Overland, Kenneth L Simons, Michael Spagat|
|Publication Date:||December 2000|
|Keyword(s):||Bifurcation, Dictatorship, Growth, Political Economy|
|Programme Areas:||Public Economics, Transition Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=2653|
We model growth in dictatorships facing each period an endogenous probability of ?political catastrophe? that would extinguish the regime's wealth extraction ability. Domestic capital exhibits a bifurcation point determining economic growth or shrinkage. With low initial domestic capital the dictator plunders the country's resources and the economy shrinks. With high initial domestic capital the economy eventually grows faster than is socially optimal.