Economic Effects of Democracy. An Empirical Analysis
Rivista di Politica Economica , Vol. XI-XII, pp. 69-116, 2003
48 Pages Posted: 11 Feb 2005
This research analyses through the use of instrumental variables estimation whether democracy has an effect on variables belonging to three different categories: fiscal policy, inequality in income distribution and political instability. It shows there is no stable relation between democracy and fiscal policy variables between countries of the sample in the 1978-1988 period. Democracy, on the other hand, significantly affects the difference in middle class income share (positively) and in changes at the top of the executive (negatively).
Keywords: Democracy, Fiscal Policy, Inequality, Event Study, Instrumental Variables
JEL Classification: C21, E62, O15, O17
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