Spagat, M, Overland, Jody and Simons, K. L (2005) Political Instability and Growth in Dictatorships. PUBLIC CHOICE, 125 (3-4).
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We model growth of dictatorships facing each period an endogenous probability of "political catastrophe" that would extinguish the regime's wealth extraction ability. Domestic capital exhibits a bifurcation point determining economic growth or schrikage. With low initial domestic capital the dictator plunders the country's resources and the economy shrinks. With high initial domestic capital the economy eventually grows faster than is socially optimal.
This is a Submitted version This version's date is: 12/2005 This item is not peer reviewed
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