with Fabrizio Coricelli
August 2009
COMMENTS
WELCOME
The relationship between economic and political liberalization has received
a great deal
of attention lately, yet the possibility of a non-linear relationship and
the role of reversals
remain largely neglected. Focusing on democratization and financial reform,
this paper
offers evidence for a U-shaped relationship across countries, over time
as well as in a
panel setting using a wide range of estimators for various reform measures.
We link this
non-linear relationship to the notion of partial or captured democracy.
We provide as well
econometric support showing that even when de facto is modelled as a function
of de jure
financial liberalization, this non-linearity obtains.
Working paper version available at:
IZA
DP 4338
CEPR
DP 7393
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