Holding on? Ethnic divisions, political institutions and the duration of economic declines

• 成果类型: Article
• 署名作者: Bluhm, Richard; Thomsson, Kaj
• 署名单位: Leibniz University Hannover; University of California System; University of California San Diego; Maastricht University
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2020.102457
• 发表日期: 2020
• 关键词: Economic crises; Delayed recovery; political economy; ethnic diversity

摘要

We analyze the duration of large economic declines and provide a theory of delayed recovery. We show theoretically that uncertain post-recovery incomes lead to a commitment problem which limits the possibility of cooperation in ethnically heterogeneous countries. Strong constraints on the executive solve this problem by reducing the uncertainty associated with cooperative behavior. We test the model using standard data on linguistic heterogeneity and detailed data on ethnic power configurations. Our findings support the central theoretical prediction: countries with more constrained political executives experience shorter economic declines. The effect is large in ethnically heterogeneous countries but virtually non-existent in homogeneous societies. Our main results are robust to a variety of perturbations regarding the estimation method, the estimation sample, measures of heterogeneity, and measures of institutions.