Who is Afraid of Political Instability?

CERGE-EI Working Paper Series No. 126

21 Pages Posted: 22 Jan 2010

See all articles by Nauro F. Campos

Nauro F. Campos

University College London; University of Michigan at Ann Arbor - The William Davidson Institute; IZA Institute of Labor Economics

Jeffrey B. Nugent

University of Southern California - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 1, 1998

Abstract

An unstable macroeconomic environment is often regarded as detrimental to economic growth. Among the sources contributing to such instability, much of the blame has been assigned to political issues. This paper empirically tests for a causal and negative long-run relationship between political instability and economic growth but finds no such relationship. Sensitivity analysis, however, indicates that there is indeed a short-run negative relationship and, that in the long-run and ignoring institutional factors, the group of African countries is the driving force. In other words, we suspect that excluding the African countries from their samples, results of a negative relation between SPI and growth would founder.

Keywords: economic growth, political instability, Granger causality.

JEL Classification: O40, E23, D72.

Suggested Citation

Campos, Nauro F. and Nugent, Jeffrey B., Who is Afraid of Political Instability? (April 1, 1998). CERGE-EI Working Paper Series No. 126, Available at SSRN: https://ssrn.com/abstract=1539705 or http://dx.doi.org/10.2139/ssrn.1539705

Nauro F. Campos (Contact Author)

University College London ( email )

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University of Michigan at Ann Arbor - The William Davidson Institute

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IZA Institute of Labor Economics

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Jeffrey B. Nugent

University of Southern California - Department of Economics ( email )

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Los Angeles, CA 90089
United States
510-740-2107 (Phone)
510-740-8543 (Fax)

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