Democracy and Reforms
University of California, Los Angeles (UCLA) - Anderson School of Management; Institute for the Study of Labor (IZA)
International Monetary Fund (IMF) - Research Department
International Monetary Fund (IMF) - Research Department; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute
CEPR Discussion Paper No. DP7194
Empirical evidence on the relationship between democracy and economic reforms is scarce, limited to few reforms and countries and for few years. This paper studies the impact of democracy on the adoption of economic reforms using a new dataset on reforms in the financial, capital, public, and banking sectors, product and labor markets, agriculture, and trade for 150 countries over the period 1960-2004. Democracy has a positive and significant impact on the adoption of economic reforms but there is no evidence that economic reforms foster democracy. Our results are robust to the inclusion of a large variety of controls and estimation strategies.
Number of Pages in PDF File: 44
Keywords: economic liberalization, financial markets, institutions, political economy, product markets, transition
JEL Classification: E6, O57
Date posted: March 11, 2009
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