Scandinavian Working Papers in Economics

Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

No 08-15: Economic Growth and Institutional Reform in Modern Monarchies and Republics: : A Historical Cross-Country Perspective 1820-2000

Christian Bjørnskov () and Peter Kurrild-Klitgaard
Additional contact information
Christian Bjørnskov: Department of Economics, Aarhus School of Business, Postal: Frichshuset Hermodsvej 22, 8230 Åbyhøj, Denmark
Peter Kurrild-Klitgaard: Dept. of Political Science, Postal: University of Copenhagen, Denmark

Abstract: Standard theoretical arguments suggest that republics ought to grow faster than monarchies and experience lower transitional costs following reforms. We employ a panel of 27 countries observed from 18202000 to explore whether regime types and institutional reforms have differential growth effects in monarchies and republics. A set of Barrotype regressions show that there are no significant growth differences between the two regime types and that the effects of incremental reforms do not differ between them, but that those of largescale reforms do. Specifically, we find a strong “valleyoftears” effect of large reforms in republics while monarchies benefit from such reforms in the tenyear perspective adopted here. We offer some tentative thoughts on the underlying mechanisms responsible for the results.

Keywords: Growth; Institution; Reform; Monarchy

JEL-codes: D72; N00; O10; P14; P16; P17; P48; P51

50 pages, July 30, 2008

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