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Unrest Before Democratization: Evidence and Macroeconomic Implications

39 Pages Posted: 4 Oct 2014  

Toan Phan

Federal Reserve Banks - Federal Reserve Bank of Richmond

Lance Kent

College of William and Mary - Department of Economics

Date Written: October 1, 2014

Abstract

We document that most democratic transitions are preceded by lengthy episodes of mass political unrest. These episodes are associated with an increased probability of political disruption and significant macroeconomic losses, especially in non-democracies and even in the absence of violence. Episodes of unrest can explain 20 percent of the difference in volatility of output growth between non-democracies and democracies. Hence, while the literature gives significant attention to long-run benefits of democratic transitions, we find that the political process preceding these transitions is associated with significant political and economic risks in the short run.

Keywords: democratic transition, growth, volatility, risk

JEL Classification: O43, P16, E32

Suggested Citation

Phan, Toan and Kent, Lance, Unrest Before Democratization: Evidence and Macroeconomic Implications (October 1, 2014). Available at SSRN: https://ssrn.com/abstract=2504072 or http://dx.doi.org/10.2139/ssrn.2504072

Toan Phan (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

Lance Kent

College of William and Mary - Department of Economics ( email )

P.O. Box 8795
Williamsburg, VA 23187-8795
United States

HOME PAGE: http://www.lancekent.org

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