Chicago boy's repentance?

Doug Henwood dhenwood at panix.com
Sun Apr 21 11:38:53 PDT 2002


"Democracy and the Variability of Economic Performance"

BY: HEITOR ALMEIDA

New York University

Stern School of Business, Finance

DANIEL FERREIRA

University of Chicago, Department of Economics

Document: Available from the SSRN Electronic Paper Collection:

http://papers.ssrn.com/paper.taf?abstract_id=303285

Date: March 5, 2002

Contact: HEITOR ALMEIDA

Email: Mailto:halmeida at stern.nyu.edu

Postal: New York University

Stern School of Business, Finance

Room 9-190

44 West 4th Street

New York, NY 10012-1126 UNITED STATES

Phone: 212-998-0279

Fax: 212-995-4233

Co-Auth: DANIEL FERREIRA

Email: Mailto:dsferrei at midway.uchicago.edu

Postal: University of Chicago, Department of Economics

1126 East 59th Street

Chicago, IL 60637 UNITED STATES

ABSTRACT:

Sah (1991) conjectured that more centralized societies should

have more volatile performances than less centralized ones. We

show in this paper that this is true both for cross-country and

within-country variability in growth rates. It is also true for

some measures of policies. Finally, we show that both the best

and worst performers in terms of growth rates are more likely to

be autocracies. These empirical results are unaffected by many

robustness and specification checks. We argue that the evidence

in the paper is consistent with the theoretical implications in

Sah and Stiglitz (1991) and Rodrik (1999). The greater stability

of growth rates and policy measures among democratic countries

adds to an existing list of desirable features of democracies.

Our evidence also corroborates the common view that some

autocratic countries had the most impressive growth experiences.

However, since the worst experiences are also associated with

autocratic countries, in an ex-ante sense autocracy is no

prescription for growth.

Keywords: Democracy, autocracy, growth, variability,

fallibility, centralization of decision-making



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