The Stability and Breakup of Nations: A Quantitative Analysis

VIVES Discussion Paper No. 10

47 Pages Posted: 12 Apr 2010

See all articles by Klaus Desmet

Klaus Desmet

Southern Methodist University (SMU); Centre for Economic Policy Research (CEPR)

Michel Le Breton

University of Toulouse I - GREMAQ-IDEI

Ignacio Ortuno-Ortin

Universidad Carlos III de Madrid - Department of Economics

Shlomo Weber

Southern Methodist University (SMU) - Department of Economics; New Economic School

Date Written: June 2009

Abstract

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

Desmet, Klaus and Le Breton, Michel and Ortuno-Ortin, Ignacio and Weber, Shlomo, The Stability and Breakup of Nations: A Quantitative Analysis (June 2009). VIVES Discussion Paper No. 10. Available at SSRN: https://ssrn.com/abstract=1586772 or http://dx.doi.org/10.2139/ssrn.1586772

Klaus Desmet (Contact Author)

Southern Methodist University (SMU) ( email )

6212 Bishop Blvd.
Dallas, TX 75275
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Michel Le Breton

University of Toulouse I - GREMAQ-IDEI ( email )

Manufacture des Tabacs
21 Allees de Brienne
Toulouse, 31000
France

Ignacio Ortuno-Ortin

Universidad Carlos III de Madrid - Department of Economics ( email )

Calle Madrid 126
Getafe, 28903
Spain

Shlomo Weber

Southern Methodist University (SMU) - Department of Economics ( email )

Dallas, TX 75275
United States
214-768-3577 (Phone)
214-768-1821 (Fax)

New Economic School ( email )

Moscow
Russia
+ 7-495-9569508 (Phone)

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