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Home » Economic » Economic Policy

Political Freedom and the Stability of Economic Policy

Source: www.cato.org
Topic: Economic Policy

Sort Desciption: dom might explain differences in the stability of economic policies. .... fostering stable economic policies. In other words political stability ...

Content Inside: P OLITICAL F REEDOM AND THE S TABILITY OF E CONOMIC P OLICY Abdiweli M. Ali and Hodan Said Isse Most of the regime shifts in democracies occur through the elec- toral defeat of the incumbents while most dictatorships relinquish power only through violence. Democracy requires consent of the citizenry and consent requires political legitimacy. Therefore violent popular opposition is neither a necessary nor a sufficient condition for a democratic breakdown. Thus it seems that to the extent that demo- cratic authority is rooted in the popular consent political violence poses less of a threat to democracies than it does to dictatorships. However recent experiences in Africa and Latin America indicate that democratic decay and political delegitimization coupled with disastrous economic performance shortened the life span of many democratic regimes. It is therefore not clear whether democracies are more or less resilient than dictatorships. Nevertheless it is possible that democratic regimes are characterized by more stable economic policies than nondemocratic regimes and therefore the type of the political regime may be important not for just being democratic or dictatorial but for the stability of its policies. By focusing on poor indicators of instability such as coups revolu- tions and political assassinations the current literature has failed to differentiate between the collapse of democratic and authoritarian rules or whether democratic regimes collapse for the same reasons as do authoritarian regimes. The current literature is silent on whether democracies are more fragile or less susceptible to economic and political breakdowns. Using a number of political and policy instabil- ity variables this article examines whether political freedom (a proxy for democracy) has any effect on the stability of political regimes. Regimes can be characterized as unstable if they are susceptible to violent and unexpected turnover of the political leaders. Cato Journal ...

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