Unbundling Democracy: Tilly Trumps Schumpeter

). All remaining errors are our own. Abstract: Much recent political economy and political science literature views democracy in terms of political rights. This feature is particularly pronounced in the empirical literature. We expand on this view of democracy by reincorporating the role of civil liberties, which are at the core of modern democracy, in two ways. First, we present a conceptual framework that identifies four fundamental sources of potential differences in the evolution of political rights and civil liberties. Perhaps more importantly, we provide systematic, robust and varied empirical evidence on this differential evolution using cross-national panel data. Our two main results are: Civil liberties are far more persistent than political rights in affecting subsequent outcomes; Civil liberties are complementary to political rights in affecting subsequent outcomes, but the reverse is not the case. These two main results are robust to alternative measures of democracy as political rights, the addition of covariates, estimation techniques, and variations in our sample. In particular these results are invariant to whether or not the modernization hypothesis holds or the political natural resource curse exists. More generally, our analysis can be framed as an implementation and comparison of two different approaches to democracy: the electoral democracy view and the liberal democracy view. The data support the latter

The Impact of Financial Market Frictions on Trade Flows, Capital Flows and Economic Development

We introduce financial frictions in a two sector model of international trade with heterogeneous agents. The level of specialization in the economy (economic development) depends on the quality of financial institutions. Underdeveloped financial markets prohibit an economy to specialize in sectors where finance is important. Capital flows and international trade are complements when countries differ in the degree of development of their financial sectors. Capital flows to countries with more robust financial institutions which in turn allow their economies to develop sectors that are financially dependent

Scale and the Origins of Structural Change

Structural change involves a broad set of trends: (i) sectoral reallocations, (ii) rich movements of productive activities between home and market, and (iii) an increase in the scale of productive units. After extending these facts, we develop a model to explain them within a unified framework. The crucial distinction between manufacturing, services, and home production is the scale of the productive unit. Scale technologies give rise to industrialization and the marketization of previously home produced activities. The rise of mass consumption leads to an expansion of manufacturing, but a reversal of the marketization process for service industries. Finally, the later growth in the scale of services leads to a decline in industry and a rise in services

A structural model of the transition to agriculture

Endogenous growth, Population growth, Regime switching, Cross-cultural analysis, D9, N0,