Martin Paldam

A farewell to critical junctures: Sorting out long-run causality of income and democracy

Publikation: Working paperForskning

    Erich Gundlach, Kiel Institute for the World Economy, Tyskland
  • Martin Paldam
  • Institut for Økonomi
We consider the empirical relevance of two opposing hypotheses on the causality between
income and democracy: The Democratic Transition claims that rising incomes cause a transi¬
tion to democracy, whereas the Critical Junctures hypothesis denies this causal relation. Our
empirical strategy is justified by Unified Growth Theory, which hypothe¬sizes that the present
international income differences have roots in the prehistoric past. Thus, we use prehistoric
measures of biogeography as instruments for modern income levels, and find a large long-run
causal effect of income on the degree of democracy. This result rejects the Critical Junctures
hypothesis, which is an important part of the Primacy of Institutions view.
UdgiverInstitut for Økonomi, Aarhus Universitet
Antal sider25
StatusUdgivet - 2008

Bibliografisk note

Published in the European Journal of Political Economy 2009

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