THE NEW INSIGHTS ON THE RELATIONSHIP BETWEEN DEMOCRACY AND INCOME: EMPIRICAL EVIDENCE FROM ADVANCED ECONOMIES

Year 2019, Volume: 18 Issue: 72, 1776 - 1796, 15.10.2019

Onur Özdemir

https://doi.org/10.17755/esosder.554336

Cited By: 1

Abstract

This paper replicates the data set of Acemoglu et al. (2008) to investigate
the relationship between the level of income and the degree of democracy in
terms of advanced economies over the period 1960-2000. The study extends the
initial findings of Acemoglu et al. (2008) in terms of econometric procedures
by using the system-GMM and allowing for
more flexible – non-linear – specifications for the effect of income on
democracy. The empirical results provide evidence
of positive and non-linear effect from income to democracy for advanced
economies even after controlling for country-specific effects. In addition,
with the same data set that of Acemoglu et al. (2008), we find that the
coefficients of log GDP per capita are positive
and statistically significant in most specifications by way of using the
system-GMM method, in contrast to the results provided by Acemoglu et al.
(2008). Furthermore, an interesting
result is the square term of log GDP per capita which is negative and
statistically significant. This outcome indicates that while the initial stages
of an increase in log GDP per capita have a positive impact on democracy, the
latter stages show that this positive correlation turns into a negative possibly
due to the changing dynamics of the power of income segments in the society.

Keywords

Democracy, Income, Difference-GMM, System-GMM, Non-Linear Specification

THE NEW INSIGHTS ON THE RELATIONSHIP BETWEEN DEMOCRACY AND INCOME: EMPIRICAL EVIDENCE FROM ADVANCED ECONOMIES

Abstract

Bu makale,
Acemoglu vd. (2008)’nin veri setini kullanarak gelir seviyesi ve demokrasi
düzeyi arasındaki ilişkiyi 1960-2000 dönemi için gelişmiş ülkeler açısından
araştırmaktadır. Çalışma Acemoglu vd. (2008)’nin önsel çıkarımlarını sistem-GMM
ve gelirin demokrasi üzerindeki etkisi adına esnek – doğrusal olmayan – spesifikasyon
kullanımına olanak sağlayarak ekonometrik yöntemler açısından genişletmektedir.
Ampirik sonuçlar, ülkeye-özgü etkilerin hesaba katıldığı durumlarda bile,
gelişmiş ekonomiler için gelirden demokrasiye doğru pozitif ve doğrusal olmayan
bir etkinin varlığına dair çıktılar sunmaktadır. Ayrıca Acemoglu vd. (2008)
tarafından kullanılan aynı veri seti çerçevesinde, Acemoglu vd. (2008)’nin
sonuçlarına karşıt olarak, kişi başına gelirin logaritmik katsayısının
sistem-GMM yöntemi kullanımı aracılığıyla çoğu spesifikasyon için pozitif ve
istatistiksel olarak anlamlı çıktığına ulaşılmıştır. Buna ek olarak, ilgi
çekici sonuç kişi başına gelirin logaritmik katsayı karesinin negatif ve
istatistiksel olarak anlamlı çıkmasıdır. Bu çıktı kişi başına düşen GSYH’deki
artışın ilk aşamalarının demokrasi üzerinde olumlu bir etkisi olmasına karşın,
toplumdaki gelir bölüşümündeki gücün değişen dinamiklerine büyük oranda bağlı
olarak ileri aşamalarında negatif bir duruma dönüştüğünü göstermektedir.

Keywords

Demokrasi, Gelir, Fark-GMM, Sistem-GMM, Doğrusal-Olmayan Spesifikasyon

References

• Acemoglu, D., Johnson, S., Robinson, J. A. & Yared, P., 2008. Income and Democracy. American Economic Review, 98(3), pp. 808-842.
• Andersen, T. G. & Sørensen, B. E., 1996. GMM Estimation of a Stochastic Volatility Model: A Monte Carlo Study. Journal of Business and Economic Statistics, 14(3), pp. 328-352.
• Anderson, T. W. & Hsiao, C., 1982. Formulation and Estimation of Dynamic Models Using Panel Data. Journal of Econometrics, 18(1), pp. 47-82.
• Arellano, M. & Bond, S. R., 1991. Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. Review of Economic Studies, 58(2), pp. 277-297.
• Arellano, M. & Bover, O., 1995. Another Look at the Instrumental Variable Estimation of Error-Components Models. Journal of Econometrics, 68(1), pp. 29-51.
• Barro, R. J., 1997. Determinants of Economic Growth: A Cross-Country Empirical Study. Cambridge, MA: MIT Press.
• Barro, R. J., 1999. Determinants of Democracy. Journal of Political Economy, 107(6), pp. 158-183.
• Benhabib, J., Corvalan, A. & Spiegel, M. M., 2011. Reestablishing the Income-Democracy Nexus. National Bureau of Economic Research, NBER Working Papers 16832.
• Blundell, R. & Bond, S., 1998. Initial Conditions and Moment Restrictions in Dynamic Panel Data Models. Journal of Econometrics, 87(1), pp. 115-143.
• Boix, C., 2011. Democracy, Development, and the International System. American Political Science Review, 105(4), pp. 809-829.
• Bollen, K. A., 1990. Political Democracy: Conceptual and Measurement Traps. Studies in Comparative International Development, 25(1), pp. 7-24.
• Bollen, K. A., 2001. Cross-National Indicators of Liberal Democracy, 1950-1990. Inter-University Consortium for Political and Social Research, 2nd ICPSR version, Chapel Hill, NC: University of North Carolina.
• Bond, S. R., 2002. Dynamic Panel Data Models: A Guide to Micro Data Methods and Practice. Portuguese Economic Journal, 1(2), pp. 141-162.
• Bowsher, C. G., 2002. On Testing Overidentifying Restrictions in Dynamic Panel Data Models. Economics Letters, 77(2), pp. 211-220.
• Capoccia, G., 2016. Critical Junctures. In The Oxford Handbook of Historical Institutionalism, Orfeo Fioretos, Tulia G. Falleti & Adam Sheingate (Eds.).
• Che, Y., Lu, Y., Tao, Z. & Wang, P., 2013. The Impact of Income on Democracy Revisited. Journal of Comparative Economics, 41(1), pp. 159-169.
• Corvalan, A., 2010. On the Effect of Income on Democracy During the Postwar Period. New York University Working Paper.
• Greene, W. H., 2003. Econometric Analysis. 5th edition, Upper Saddle River, New Jersey: Prentice Hall.
• Gundlach, E. & Paldam, M., 2009. A Farewell to Critical Junctures: Sorting Out Long-Run Causality of Income and Democracy. European Journal of Political Economy, 25(3), pp. 340-354.
• Hansen, L. P., 1982. Large Sample Properties of Generalized Method of Moments Estimators. Econometrica, 50(4), pp. 1029-1054.
• Heid, B., Langer, J. & Larch, M., 2012. Income and Democracy: Evidence from System GMM Estimates. Economic Letters, 116(2), pp. 166-169.
• Heston, A., Summers, R. & Aten, B., 2002. Penn World Tables 6.1. Philadelphia: Center for International Comparisons at the University of Pennsylvania.
• Lipset, S. M., 1959. Some Social Requisites of Democracy: Economic Development and Political Legitimacy. Journal of Law, Economics, and Organization, 15(1), pp. 222-279.
• Moral-Benito, E & Bartolucci, C., 2012. Income and Democracy: Revisiting the Evidence. Economics Letters, 117(3), pp. 844-847.
• Papaioannou, E. & Siourounis, G., 2008. Economic and Social Factors Driving the Third Wave of Democratization. Journal of Comparative Economics, 36(3), pp. 365-387.
• Roodman, D., 2009a. A Note on the Theme of Too Many Instruments. Oxford Bulletin of Economics and Statistics, 71(1), pp. 135-158.
• Roodman, D., 2009b. How to do xtabond2: An Introduction to Difference and System GMM in Stata. Stata Journal, 9(1), pp. 86-136.
• Stock, J. H & Wright, J. H., 2000. GMM with Weak Identification. Econometrica, 68(5), pp. 1055-1096.
• Stock, J. H., Wright, J. H., Yogo, M., 2002. A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments. Journal of Business and Economic Statistics, 20(4), pp. 518-529.
• Wooldridge, J. M., 2002. Econometric Analysis of Cross Section and Panel Data. Cambridge, MA: MIT Press.