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Income inequality, competitiveness of political systems and the distance to the efficient frontier of economic growth
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.
2014 (English)Report (Other academic)
Abstract [en]

This paper investigates whether and under which conditions democracy renders economic performance more efficient. Efficiency, measured by the ratio of (mean)/ (standard deviation) of output growth, becomes an important indicator of the relative goodness of economic performance when countries face a trade-off between development scenarios with high-mean and low-volatility of output growth. This seems to be a case when economies approach the efficient frontier. However, when countries are far away from the frontier economic efficiency may be improved by simultaneously increasing the mean and decreasing the volatility of growth. This study differs from others on the topic in three basic ways: (i) asymmetric (G)ARCH models are employed to simultaneously estimate the mean and volatility of output growth conditional on the factors of interest; (ii) variations in within-country effects of democratisation on the mean, variance and efficiency of economic growth conditional on cross-country variations of income inequality are analysed; (iii) the asymmetry of deviations from the mean is investigated. The results suggest (do not suggest) that in countries with no (with) military dictatorship history democratisation moves economies towards the efficient frontier. The positive effect of democratisation on the efficiency of economic performance seems to be systematically stronger in countries with lower (higher) income inequality in the countries with (without) consolidated civil governments.

Place, publisher, year, edition, pages
Umeå: Umeå universitet , 2014. , 56 p.
Series
Umeå economic studies, ISSN 0348-1018 ; 872
Keyword [en]
Mean and volatility of output growth, efficient frontier, political system competitiveness, income inequality, weak institutions, asymmetric GARCH model
National Category
Social Sciences
Research subject
Economics
Identifiers
URN: urn:nbn:se:umu:diva-92590OAI: oai:DiVA.org:umu-92590DiVA: diva2:741814
Available from: 2014-08-29 Created: 2014-08-29 Last updated: 2014-09-05Bibliographically approved
In thesis
1. Essays on growth and political transition
Open this publication in new window or tab >>Essays on growth and political transition
2014 (English)Doctoral thesis, comprehensive summary (Other academic)
Place, publisher, year, edition, pages
Umeå: Department of Economics, Umeå University, 2014. 30 p.
Series
Umeå economic studies, ISSN 0348-1018 ; 893
Keyword
de facto and de jure political power, economic growth, efficient frontier of economic growth, economic crisis, military dictatorship, political regimes, weak institutions
National Category
Social Sciences Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-92600 (URN)978-91-7601-092-1 (ISBN)
Public defence
2014-09-30, S213h, Umeå, 13:15 (English)
Opponent
Supervisors
Available from: 2014-09-09 Created: 2014-08-29 Last updated: 2014-09-11Bibliographically approved

Open Access in DiVA

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