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

TY - UNPB

T1 - A farewell to critical junctures: Sorting out long-run causality of income and democracy

AU - Gundlach, Erich

AU - Paldam, Martin

N1 - Published in the European Journal of Political Economy 2009

PY - 2008

Y1 - 2008

N2 - We consider the empirical relevance of two opposing hypotheses on the causality betweenincome 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.

AB - We consider the empirical relevance of two opposing hypotheses on the causality betweenincome 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.

KW - Long-run growth, democracy, unified growth theory, biogeography

M3 - Working paper

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

PB - Institut for Økonomi, Aarhus Universitet

CY - Aarhus

ER -