Yet Another Look at the Modernisation Hypothesis: Evidence from Latin America

We investigate in this paper whether the modernisation hypothesis holds in Latin America, and our sample includes nine Latin American countries that re-democratised in the last forty years or so. The data set covers the period between 1970 and 2007, and the results, based on dynamic panel data analysis (we use the Fixed Effects, Fixed Effects with Instrumental Variables, DIF-GMM and SYS-GMM estimators), suggest that the modernisation hypothesis holds in the region, or that income, or development in general, play a positive role on democracy. We also test for the critical junctures hypothesis, or whether particular historical structural changes play any role in contemporaneous democratisation in the region, however we are not able to provide any concrete evidence in favour of it. Essentially, we suggest that a certain level of development is an important condition for democracy to mature and survive, which-- in times of a new democratisation wave taking place in societies with different levels of development-- is a suggestive observation.Modernisation hypothesis, democracy, development, Latin America

Does democracy foster or hinder growth? Extreme-type political regimes in a large panel

Using a panel dataset of 86 countries from 1960-2005, this paper empirically assesses the effect of several democracy proxies (by means of the Polity IV database), together with a set of control variables, such as human capital and the initial level of GDP per capita, on the rate of economic growth. By means of pooled OLS regressions, fixed effects and TSLS estimation procedures our results support the long-run conditional convergence hypothesis and they show a positive and statistically significant effect of democracy and human capital on economic growth. Furthermore, these findings are robust to several sensitivity exercises, such as the consideration of different time spans and groupings (rich and poor countries). Our evaluation allows us to conclude that electoral democracy, by itself, increases GDP growth per capita while almost no support is found for the hypothesis that autocracy, by itself, increases it.endogeneity, autocracy, human capital, convergence, Polity-IV

The Political and Economic Determinants of Trade Disputes under the WTO

Replaced with revised version of paper 02/25/08.democratization, system of government, trade disputes, World Trade Organization (WTO), economic strata, International Relations/Trade, P16, F13,

Evolution of Risk and Political Regimes

The article contributes to the growing literature on intermediate regiimes by presenting a model that incorporates key features of such regimes and generates several of the "stylized facts" that characterize their behavior: their political volatility, cross nationality and over time, and the veriability of their economic performance something that renders their economies among the fastest growing and declining in global samples. Using an instrumental veriables approach, we test the model employing cross-national data.

Political Disagreement and Delegation in a Multi-Level Governance Setting

A large share of delegation models takes into account the effect of political disagreement when explaining delegation. Yet, delegation models make sharply contrasting predictions on how political disagreement translates into the level of discretion delegated to agencies. Moreover, empirical findings are contradictory. The current paper addresses this puzzle by disentangling mechanisms driving the effect of political disagreement on delegation. Furthermore, we distinguish conditions interacting with the effect of political disagreement on discretion. We apply the conditions to the research context of the present paper: economic restructuring in the UK under New Labour, which took place in a multi-level governance setting. We derive hypotheses on the effect of political disagreement on discretion and explore our theoretical predictions with the use of a novel dataset on economic restructuring in the UK under New Labour (Bennett and Payne 2000). Our analysis show that political disagreement leads to lower levels of discretion delegated.

Quitting in Protest: A Theory of Presidential Policy Making and Agency Response

This paper examines the effects of centralized presidential policy-making, implemented through unilateral executive action, on the willingness of bureaucrats to exert effort and stay in the government. Extending models in organizational economics, we show that policy initiative by the president is a substitute for initiative by civil servants. Yet, total effort is enhanced when both work. Presidential centralization of policy often impels policy-oriented bureaucrats ( zealots ) to quit rather than implement presidential policies they dislike. Those most likely to quit are a range of moderate bureaucrats. More extreme bureaucrats may be willing to wait out an opposition president in the hope of tempering future policy when an allied president is elected. As control of the White House alternates between ideologically opposed extreme presidents, policy-minded moderates are stripped from bureaucratic agencies leaving only policy extremists or poorly performing slackers. These departures degrade policy initiative in moderate agencies

Public Sector Personnel Economics: Wages, Promotions, and the Competence-Control Trade-off

We model personnel policies in public agencies, examining how wages and promotion standards can partially offset a fundamental contracting problem: the inability of public sector workers to contract on performance, and the inability of political masters to contract on forbearance from meddling. Despite the dual contracting problem, properly constructed personnel policies can encourage intrinsically motivated public sector employees to invest in expertise, seek promotion, remain in the public sector, and develop policy projects. However, doing so requires internal personnel policies that sort slackers from zealots. Personnel policies that accomplish this task are quite different in agencies where acquired expertise has little value in the private sector, and agencies where acquired expertise commands a premium in the private sector. Finally, even with well-designed personnel policies, there remains an inescapable trade-off between political control and expertise acquisition

Why Do Countries Peg the Way They Peg? The Determinants of Anchor Currency Choice

Conditional on choosing a pegged exchange rate regime, what determines the currency to which countries peg or “anchor” their exchange rate? This paper aims to answer this question using a panel multinomial logit framework, covering more than 100 countries for the period 1980-1998. We find that trade network externalities are a key determinant of anchor currency choice, implying that there are multiple steady states for the distribution of anchor currencies in the international monetary system. Other factors found to be related to anchor currency choice include the symmetry of output co-movement, the currency denomination of debt, and legal or colonial origins

Why Do Countries Peg the Way They Peg? The Determinants of Anchor Currency Choice

Conditional on choosing a pegged exchange rate regime, what determines the currency to which countries peg or “anchor” their exchange rate? This paper aims to answer this question using a panel multinomial logit framework, covering more than 100 countries for the period 1980-1998. We find that trade network externalities are a key determinant of anchor currency choice, implying that there are multiple steady states for the distribution of anchor currencies in the international monetary system. Other factors found to be related to anchor currency choice include the symmetry of output co-movement, the currency denomination of debt, and legal or colonial origins.