Democracy, Volatility, and Economic Development

@article{Mobarak2005DemocracyVA,
  title={Democracy, Volatility, and Economic Development},
  author={A. Mushfiq Mobarak},
  journal={Review of Economics and Statistics},
  year={2005},
  volume={87},
  pages={348-361}
}
Growth stability is an important objectivebecause development requires sustained increases in income, because volatility is costly for the poor, and because volatility deters growth. We study the determinants of average growth and its volatility as a two-equation system, and find that higher levels of democracy and diversification lower volatility, whereas volatility itself reduces growth. Muslim countries instrument for democracy, and measures of diversification identify volatility. In… CONTINUE READING
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