Exploring Non-Linear Effects of Political Institutions on Economic Institutions

23 Pages Posted: 24 Feb 2017

See all articles by Ryan Murphy

Ryan Murphy

Southern Methodist University (SMU)

Date Written: February 23, 2017


Recent research has explored the determinants of economic freedom, an important measure of institutional quality. Elsewhere, some scholars have posited a negative relationship between the quality of economic institutions and democracy, at very high levels of democracy. This paper disaggregates the Polity IV index into a vector of twenty dummy variables to understand how differing degrees of democracy and autocracy may impact economic freedom, thereby leaving open the possibilities for non-linearities to express themselves in the analysis. Little evidence is found of any relationship in the long run, except possibly that very autocratic political institutions may have a negative effect.

Keywords: Political Institutions, Economic Institutions, Economic Freedom of the World, Polity IV, Democracy

JEL Classification: P16

Suggested Citation

Murphy, Ryan, Exploring Non-Linear Effects of Political Institutions on Economic Institutions (February 23, 2017). Available at SSRN: https://ssrn.com/abstract=2922891 or http://dx.doi.org/10.2139/ssrn.2922891

Ryan Murphy (Contact Author)

Southern Methodist University (SMU) ( email )

6212 Bishop Blvd.
Dallas, TX 75275
United States

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