We study the dynamics of economic and political change, theoretically
and empirically. Democratic capital measured by a nation's
historical experience with democracy, and the incidence of democracy
in its neighborhood, appears to reduce exit rates from democracy
and raise exit rates from autocracy. Higher democratic
capital stimulates growth by increasing the stability of democracies.
Heterogeneous effects of democracy induce sorting of countries into
political regimes, which helps explain systematic differences between
democracies and autocracies. Our results suggest the possibility of
a virtuous circle, where accumulation of physical and democratic
capital reinforce each other, promoting economic development and
consolidation of democracy. (JEL D72, I31, N10, N40, O47)
Persson, Torsten, and Guido Tabellini.
"Democratic Capital: The Nexus of Political and Economic Change."
American Economic Journal: Macroeconomics,
Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
Economic History: Macroeconomics and Monetary Economics; Growth and Fluctuations: General, International, or Comparative
Economic History: Government, War, Law, and Regulation: General, International, or Comparative