Unrest Before Democratization: Evidence and Macroeconomic Implications
39 Pages Posted: 4 Oct 2014
Date Written: October 1, 2014
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: Suggested Citation