Political Instability, Uncertainty and Economics

54 Pages Posted: 12 Apr 2003

See all articles by Fabrizio Carmignani

Fabrizio Carmignani

UN Economic Commission for Europe - Economic Analysis Division


This paper focuses on the relationship between political instability, policy-making and macroeconomic outcomes. The theoretical section explores various models that explain the effect of instability (and political uncertainty) on growth, budget formation, inflation and monetary policy. The empirical section discusses the evidence on the predictions generated by theoretical models. Preliminary to this discussion, however, is the analysis of a few general issues concerning the specification and estimation of econometric models with political variables. Some new results are then produced on the empirical relevance of theories of strategic use of fiscal deficit.

Keywords: Political instability, Economic growth, Inflation, Fiscal Policy

Suggested Citation

Carmignani, Fabrizio, Political Instability, Uncertainty and Economics. Journal of Economic Surveys, Vol. 17, pp. 1-54, 2003. Available at SSRN: https://ssrn.com/abstract=377103

Fabrizio Carmignani (Contact Author)

UN Economic Commission for Europe - Economic Analysis Division ( email )

Room 441
Palais des Nations
1211 Geneva 10

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