Financial Liberalization and Democracy: The Role of Reform Reversals

        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
 

        This paper is featured in a VOX column
 

                                                                                                                 Back to Working Papers List