Political Stability and Economic Prosperity: Are Coups Bad for Growth?

Arbeitspapier

We provide evidence that political instability deteriorates economic growth. We establish this result based on panel difference-in-differences strategies and dynamic panel data models using a large sample of 180 countries, a novel geocoded dataset for 2,660 regions, and micro data for about 250,000 households. We exploit coups d'état as a source of exogenous variation in political instability, as they are difficult to anticipate, mirror the political zeitgeist, and reduce measurement error. We use spatial variations and synthetic control methods for identification and find that periods of instability reduce growth by 2-3 percentage points, increase unemployment, and impair health and life satisfaction. The adverse effects are stronger for women than for men.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 8317

Classification and Topics

• Classification: Wirtschaft ; Macroeconomic Analyses of Economic Development ; Microeconomic Analyses of Economic Development ; Conflict; Conflict Resolution; Alliances; Revolutions
• Subject: coups d’état ; economic growth ; political stability

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Blum, Johannes ; Gründler, Klaus
• Event: Veröffentlichung
• (who): Center for Economic Studies and Ifo Institute (CESifo)
• (where): Munich
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/219135
• Last update: 10.03.2025, 11:42 AM CET