Discussion paper
DP19074 Political Institutions and Output Collapses
This paper examines whether major output collapses are more likely under autocracy. Using data on 123 developing countries over 1971-2016, we model the joint evolution of output growth and political institutions as a finite state Markov chain with a two-dimensional state space. We study how countries move between states. We find that growth is more likely to be sustained under democracy than under autocracy; output collapses are more likely to deepen under autocracy; and stagnation under autocracy can give way to outright collapse. Democratic countries appear to be more resilient.
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