No Better Time than Now: Future Uncertainty and Private Investment Under Dictatorship

Forthcoming, Economics & Politics

40 Pages Posted: 14 Nov 2017 Last revised: 22 Sep 2018

See all articles by Michael Albertus

Michael Albertus

University of Chicago - Department of Political Science

Victor Gay

Toulouse School of Economics; Institute for Advanced Study in Toulouse

Date Written: June 10, 2018

Abstract

Despite received wisdom that long time horizons and formal institutions can induce private investment under dictatorship, there is substantial investment even in relatively unconstrained regimes. This paper provides a novel explanation for the puzzle of investment in these regimes: economic elites’ uncertainty over expected investment returns under plausible alternative authoritarian successors. We construct a noisy signaling model that captures how uncertainty over which type of authoritarian successor will rule next and uncertainty in the truthfulness of policy promises made by potential autocratic successors might provide incentives for elite investment.

Keywords: dictatorship, private investment, institutions, uncertainty

Suggested Citation

Albertus, Michael and Gay, Victor, No Better Time than Now: Future Uncertainty and Private Investment Under Dictatorship (June 10, 2018). Forthcoming, Economics & Politics. Available at SSRN: https://ssrn.com/abstract=3069580 or http://dx.doi.org/10.2139/ssrn.3069580

Michael Albertus

University of Chicago - Department of Political Science ( email )

Chicago, IL 60637
United States

Victor Gay (Contact Author)

Toulouse School of Economics ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

HOME PAGE: http://victorgay.me

Institute for Advanced Study in Toulouse ( email )

31015 Toulouse, Cedex 6
France

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