Declines in NGDP, Autocratization, and the Failure to Democratize: A Descriptive Analysis

19 Pages Posted: 18 Sep 2019 Last revised: 23 Sep 2019

See all articles by Ryan Murphy

Ryan Murphy

Southern Methodist University (SMU) - O’Neil Center for Global Markets and Freedom

Date Written: September 9, 2019

Abstract

Sumner (2015) proposes that macroeconomic mismanagement on the part of central bank authorities, which leads to declines in nominal output, will cause voters to respond with populism in the ballot box. Murphy and Smith (2018) previously found evidence for this hypothesis with populism interpreted as movements away from market liberal institutions. This paper extends the hypothesis to macroeconomic mismanagement and its relationship with democratic political institutions. It finds both that recessions foreshadow a lower probability of a dictatorship becoming a democracy, and a higher probability of a democracy becoming a dictatorship. The relationship with autocratization is most visible after fifteen years, while the negative relationship with democratization is far more persistent over time. These findings, it must be stressed, are historical and descriptive, not necessarily causal.

Keywords: Democracy, Democratization, Market Monetarism, Behavioral Political Economy, Populism

JEL Classification: D72, P16, E30

Suggested Citation

Murphy, Ryan, Declines in NGDP, Autocratization, and the Failure to Democratize: A Descriptive Analysis (September 9, 2019). Available at SSRN: https://ssrn.com/abstract=3450868 or http://dx.doi.org/10.2139/ssrn.3450868

Ryan Murphy (Contact Author)

Southern Methodist University (SMU) - O’Neil Center for Global Markets and Freedom ( email )

United States

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