Fighting inflation in developing countries: Does democracy help? An empirical investigation - HAL-SHS - Sciences de l'Homme et de la Société Access content directly
Journal Articles Journal of International Development Year : 2011

Fighting inflation in developing countries: Does democracy help? An empirical investigation

Abstract

Using the date of independence as an instrument for democratic institutions, and data over the period 1960-2003, I find a positive and significant effect of democracy on inflation in a sample of 62 developing countries. Democracy increases inflation because democracy stimulates money creation and compromises trade liberalisation. When I exclude Latin American countries from my sample, democracy has a positive but insignificant effect on inflation. This suggests that the significant effect of democracy is due to Latin American countries experiences. Thus, my results reconcile two views: one that 'populist democracy' is a Latin American phenomenon; and the other that democracy does not necessarily induce better macroeconomic management in developing countries.
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Dates and versions

halshs-00628423 , version 1 (03-10-2011)

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  • HAL Id : halshs-00628423 , version 1

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Abdoul' Ganiou Mijiyawa. Fighting inflation in developing countries: Does democracy help? An empirical investigation. Journal of International Development, 2011, 23, pp.656-696. ⟨halshs-00628423⟩
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