No Better Time than Now: Future Uncertainty and Private Investment Under Dictatorship

26 Pages Posted: 11 Feb 2019

See all articles by Michael Albertus

Michael Albertus

University of Chicago - Department of Political Science

Victor Gay

Toulouse School of Economics; Institute for Advanced Study in Toulouse

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Date Written: March 2019

Abstract

Despite received wisdom that long time horizons and formal institutions can induce private investment under dictatorship, there is substantial investment even in relatively unconstrained regimes. This paper provides a novel explanation for the puzzle of investment in these regimes: economic elites’ uncertainty over expected investment returns under plausible alternative authoritarian successors. We construct a noisy signaling model that captures how uncertainty over which type of authoritarian successor will rule next and uncertainty in the truthfulness of policy promises made by potential autocratic successors might provide incentives for elite investment.

Suggested Citation

Albertus, Michael and Gay, Victor, No Better Time than Now: Future Uncertainty and Private Investment Under Dictatorship (March 2019). Economics & Politics, Vol. 31, Issue 1, pp. 71-96, 2019. Available at SSRN: https://ssrn.com/abstract=3331965 or http://dx.doi.org/10.1111/ecpo.12120

Michael Albertus (Contact Author)

University of Chicago - Department of Political Science ( email )

Chicago, IL 60637
United States

Victor Gay

Toulouse School of Economics ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

HOME PAGE: http://victorgay.me

Institute for Advanced Study in Toulouse ( email )

31015 Toulouse, Cedex 6
France

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