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Title:A farewell to critical junctures: Sorting out long-run causality of income and democracy PDF Logo
Authors:Gundlach, Erich
Paldam, Martin
Issue Date:2008
Series/Report no.:Kieler Arbeitspapiere 1410
Abstract:We consider the empirical relevance of two opposing hypotheses on the causality between income and democracy: The Democratic Transition hypothesis claims that rising incomes cause a transition to democracy, whereas the Critical Junctures hypothesis denies this causal relation. Our empirical strategy is motivated by Unified Growth Theory, which hypothesizes 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.
Subjects:Long-run growth
Democracy
Unified growth theory
Biogeography
JEL:O1
B25
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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