The Stability and Breakup of Nations: A Quantitative Analysis
VIVES Discussion Paper No. 10
47 Pages Posted: 12 Apr 2010
Date Written: June 2009
This paper presents a model of nations where agents vote on the optimal level of public pending. Larger nations benefit from increasing returns in the provision of public goods, but bear the costs of greater cultural heterogeneity. This tradeoff induces agents' preferences over different geographical configurations, thus determining the likelihood of secessions or unions. After calibrating the model to Europe, we identify the regions prone to secession and the countries most likely to merge. As a test of the theory, we show that the model can account for the breakup of Yugoslavia and the dynamics of its disintegration. We also provide empirical support for the use of genetic distances as a proxy for cultural heterogeneity.
Keywords: nation formation, genetic diversity, cultural heterogeneity, secession, unification
JEL Classification: H77, D70, F02, H40
Suggested Citation: Suggested Citation