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Political Selection and Persistence of Bad Governments


Daron Acemoglu


Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Georgy Egorov


Northwestern University - Kellogg School of Management; NBER

Konstantin Sonin


Higher School of Economics; Centre for Economic Policy Research (CEPR)

July 31, 2009

MIT Department of Economics Working Paper No. 09-23

Abstract:     
We study dynamic selection of governments under different political institutions, with a special focus on institutional “flexibility.” A government consists of a subset of the individuals in the society. The competence level of the government in office determines collective utilities (e.g., by determining the amount and quality of public goods), and each individual derives additional utility from being part of the government (e.g., corruption or rents from holding office). We characterize dynamic evolution of governments and determine the structure of stable governments, which arise and persist in equilibrium. Perfect democracy, where current members of the government do not have an incumbency advantage or special powers, always leads to the emergencies of the most competent government. However, any deviation from perfect democracy destroys this result. There is always at least one other, less competent government that is also stable and can persist forever, and even the least competent government can persist forever in office. Moreover, a greater degree of democracy may lead to worse governments. In contrast, in the presence of stochastic shocks or changes in the environment, greater democracy corresponds to greater flexibility and increases the probability that high competence governments will come to power. This result suggests that a particular advantage of democratic regimes may be their greater adaptability to changes rather than their performance under given conditions. Finally, we show that, in the presence of stochastic shocks, “royalty-like” dictatorships may be more successful than “junta-like” dictatorships, because they might also be more adaptable to change.

Number of Pages in PDF File: 63

Keywords: institutional flexibility, quality of governance, political economy, political transitions, voting

JEL Classification: D71, D74, C71

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Date posted: August 6, 2009  

Suggested Citation

Acemoglu, Daron and Egorov, Georgy and Sonin, Konstantin, Political Selection and Persistence of Bad Governments (July 31, 2009). MIT Department of Economics Working Paper No. 09-23. Available at SSRN: http://ssrn.com/abstract=1444145 or http://dx.doi.org/10.2139/ssrn.1444145

Contact Information

Daron Acemoglu (Contact Author)
Massachusetts Institute of Technology (MIT) - Department of Economics ( email )
50 Memorial Drive
Room E52-380b
Cambridge, MA 02142
United States
617-253-1927 (Phone)
617-253-1330 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Georgy Egorov
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
NBER ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Konstantin Sonin
Higher School of Economics ( email )
20 Myasnitskaya street
Moscow, 119017
Russia

Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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