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.


Imam, P and J Temple (2024), ‘DP19074 Political Institutions and Output Collapses‘, CEPR Discussion Paper No. 19074. CEPR Press, Paris & London. https://cepr.org/publications/dp19074