Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108767
Authors: 
Zissimos, Benjamin
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5228
Abstract: 
This paper shows how a world price shock can increase the likelihood that democratization must be used to resolve the threat of revolution. Initially, a ruling elite may be able to use trade policy to maintain political stability. But a world price shock can push the country into a situation where the elite face a commitment problem that only democratization can resolve. Because the world price shock may also reduce average incomes, the model provides a way to understand why the level of national income per capita and democracy may not be positively correlated. The model is also useful for understanding dictatorial regimes' rebuttal of World Bank calls to keep their export markets open in the face of the 2007-08 world food crisis.
Subjects: 
democracy
institutions
price shocks
social conflict
trade policy
JEL: 
D30
D74
F11
F13
P16
Document Type: 
Working Paper

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