21 Pages Posted: 27 Oct 2011
Date Written: October 27, 2011
We use a new dataset on non-resource GDP to examine the impact of commodity price volatility on economic growth in a panel of up to 158 countries during the period 1970-2007. Our main finding is that commodity price volatility leads to a significant increase in non-resource GDP growth in democracies, but to no significant increase in autocracies. To explain this result, we show that increased commodity price volatility leads to a statistically significant and quantitatively large increase in net national saving in democracies. In autocracies, on the other hand, net national saving decreased significantly. Our results hold true when using indicators capturing the quality of economic institutions in lieu of indicators of political institutions.
Keywords: commodity prices, volatility, democracy, economic growth
JEL Classification: D740, D630, F320, Q330
Suggested Citation: Suggested Citation
Arezki, Rabah and Gylfason, Thorvaldur, Commodity Price Volatility, Democracy and Economic Growth (October 27, 2011). CESifo Working Paper Series No. 3619. Available at SSRN: https://ssrn.com/abstract=1950105