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Working Paper

Income and Democracy. A Comment on Acemoglu, Johnson, Robinson, and Yared (2008)

Kiel Working Papers, 1458

Authors

  • Gundlach
  • E.
  • Paldam
  • M.

Publication Date

JEL Classification

D72 O43

Key Words

democracy

fixed-effects estimation

Modernization hypothesis

Acemoglu, Johnson, Robinson, and Yared (2008) demonstrate that estimation of the standard adjustment model with country-fixed and time-fixed effects removes the statistical significance of income as a causal factor of democracy. We argue that their empirical approach must produce insignificant income effects and that a small change in the estimation process immediately reveals the strong effect of income on democracy.

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