Blackburn, K., and Sarmah, R. (2008). (Monetary Policy Department at State Bank of Pakistan), (Pakistan Institute of Development Economics, Islamabad). Economic Letters, 113: 225 – 227. Organizations with global sourcing needs must understand the potential negative impact political instability can have on productivity, quality, and relationships and create strategies to mitigate risk. Political instability tends to be persistent. A new data set of educational attainment in the world, 1950–2010, A New Data Set of Educational Attainment in the World, 1950-2010, Threshold Effects in the Relationship Between Inflation and Growth, The incidence and persistence of corruption in economic development, The Incidence and Persistence of Corruption in Economic Development, Political instability and inflation in Pakistan, Political Instability and Inflation in Pakistan, Corruption and the Provision of Health Care and Education Services, Political instability and inflation volatility, Political Instability and Inflation Volatility, Entrepreneurship: Productive, unproductive, and destructive, Entrepreneurship: Productive, Unproductive, and Destructive, Democratic Institutions and Variability of Economic Growth in Pakistan: Some Evidence from the Time-series Analysis, `Rules, discretion and reputation in a model of monetary policy' by Robert J. Barro and David B. 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This paper presents a theoretical model with micro-foundations that captures some important features of Pakistan‘s economy which have emerged in sixty-four years of its history. Cambridge, Massachusetts: MIT Press. There have been numerous studies investigating the possible relationship between political instability and economic growth. Khan, M. S., and Senhadji, A. S. (2001). ", Iqbal, Nasir & Khan, Sardar Javaid Iqbal & Irfan, Muhammad, 2008. ", Blackburn, Keith & Forgues-Puccio, Gonzalo F., 2005. Membership. American Economic Review, 80: 689 – 713. The aim of the present study was to explore the causes and consequences of political instability in Balochistan. Africa is naturally rich with resources like minerals, gems, rubber, radioactive elements, foodstuff, etc. ", Acemoglu, Daron & Johnson, Simon & Robinson, James & Thaicharoen, Yunyong, 2003. European Economic Review, 51, 1534-1563. The resultant negative consequences of political instability in the African countries are the increase of inflation. The countries of Sub-Saharan Africa have experienced both poor economic performance and substantial political instability since their independence. 270, International Monetary Fund. The French Revolution began in 1789 with the Taking of the Bastille. Political instability has become a serious problem especially for the developing and underdeveloped countries. (2008). A supporter of Lebanon’s Hezbollah gestures as he holds a Hezbollah flag in Marjayoun, Lebanon on May 7, 2018. Kashmir Economic Review, XVII: 61 – 88. GDP growth, inequality and inflation are determinants of political instability and unemployment. ", Robert J. Barro & Xavier Sala-I-Martin, 1992. Aisen, A., and Veiga, F. J. Applied Economics, 42: 3839 – 3847. 4 The periods are: 1960–64, 1965–69, 1970–74, 1975–79, 1980–84, 1985–89, 1990–94, 1995–99, and 2000–04. D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption, O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O42 - Monetary Growth Models, E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation, H - Public Economics > H6 - National Budget, Deficit, and Debt, https://mpra.ub.uni-muenchen.de/id/eprint/35584, Consequences of Political Instability, Governance and Bureaucratic Corruption on Inflation and Growth: The Case of Pakistan, Political Instability; Governance; Corruption; Inflation; Growth. "Increasing Returns and Long-run Growth," Journal of Political … 50(4), pages 773-807. European Journal of Political Economy, 17: 749-777. Barro, R. J. For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Khurram Iqbal). In contrast, the economic performance during the democratic regimes has been observed to worsen with weak governance and high levels of corruption, high inflation due partly to reliance on seigniorage to finance public spending, and lackluster growth. ", Barro, Robert J & Gordon, David B, 1983. American Economic Review, 80: 37 – 49. When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:50:y:2011:i:4:p:773-807. State-Space Models with Regime Switching. This can also lead to government dysfunctionality and weakening of institutions. We use cookies to make interactions with our website easy and meaningful, to better understand the use of our services, and to tailor advertising. Reinikka, R., and Svensson, J. Membership. Davis, G., and Kanago, B. E.M. (2006). A. Siddiqui, D. A. and Ahmed, Q. M. (2010b). In particular, periods of autocratic regimes are typically characterized by low inflation, robust growth and low level of bureaucratic corruption due to better governance. Political instability is an enormous threat to the success of companies operating in the global supply chain arena. ", Tabellini, Guido & Alesina, Alberto, 1990. ", Engel, Charles & Hamilton, James D, 1990. A Positive Theory of Monetary Policy in a Natural Rate Model. If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. Pellegrini, L., and Gerlagh, R. (2004). ", Murphy, Kevin M. & Shleifer, Andrei & Vishny, Robert W., 1991. The main reason for political instability, imo, is the system of legalized corruption we have in place in the U.S. (1987). ", Hasim Akça & Ahmet Yilmaz Ata & Coskun Karaca, 2012. The resulting political instability could further bring Pakistan closer to being placed on the FATF black-list. iv ˙ , #1$ 2# # bbbbbbbbbbb -* ˙ ˙ ’% $ bbbbbbbbbbbbbbbb ˛* ˙ - # $ bbbbbbbbbbbbbbbbk˛ ˙ ˛ ; bbbbbbbbbbbbbbbbbbb k* ", Blackburn, Keith & Forgues-Puccio, Gonzalo F., 2007. ", Kydland, Finn E & Prescott, Edward C, 1977. The consequences of this bubble were severe for Spain. ", Barro, Robert J. Kyklos, 57: 429 – 456. In the wake of the Global Financial Crisis, the ruling PSOE was induced to nationalize banks’ toxic debt assets. FRBC Economic Review, 36, 22 – 32. For example, the economic indicators of the Zimbabwe indicate that the rate of inflation is so high that it has led to erosion of capital of the banks in the country. Alesina, A. In order to overcome this fateful outcome, the global community must take some bold decisions. A … Civil wars, political instability, and poverty kill millions of people every year. Hibbs, D. A. The above studies are mostly empirical in nature and lack theoretical foundations without which it is difficult to explain how governance, democracy, political instability… Edwards, S., and Tabellini, G. (1991). Journal of Monetary Economics, 50: 49 – 123. Government Spending and Inflationary Finance: A Public Finance Approach. Why do some countries produce so much more output per worker than others? (1990). ", Barro, Robert J. Political Instability in Lebanon. A Markov Model for Switching Regressions. West Africa is regarded as the riskiest sub-region within the African continent. ", Safdar Ullah Khan & Omar Farooq Saqib, 2009. (1989). Consequences of Political Instability, Governance and Bureaucratic Corruption on Inflation and Growth: The Case of Pakistan. as Romer, Paul M, 1986. Competitive Externalitties and Optimal Seigniorage. Cosslett, S. R., and Lee, L. F. (1985). Barro, R., and Sala-i-Martin, X. (2006). Unpublished manuscript. A New Data Set of Education Attainment in the World, 1950 – 2010. Journal of Econometrics, 27: 79 – 97. ", Robert J. Barro & David B. Gordon, 1983. Political instability is defined as the process whereby the political life or atmosphere of a country or nation suddenly changes or fails. Sometimes, natural disasters can be a source of significant political instability such as the 2010 Haiti earthquake. Democracy, Autocracy and Macroeconomic Performance in Pakistan. Consequences of Uncontrolled Coronavirus: Political Instability and Social Unrest. It has been a major hurdle in the development of Pakistan. Bernard Steunenberg. the various RePEc services. Per capita incomes rise more rapidly in democracies due to lower population increase. Politics and Business Cycles in Industrial Democracies. Journal of Political Economy, 98: 893 – 921. Hall, R. E., and Jones, C. I. Blackburn, K., Bose, N. and Haque. If that happens then Pakistan would suffer immensely giving birth to a whole host of new political and socio-economic restrictions for the whole nation. Political instability can be caused by many factors, including conflict between rival parties, insufficient resources and the proximity to other nations in conflict. ", Daron Acemoglu & Simon Johnson & James Robinson & Yunyong Thaicharoen, 2002. Barro, R. J., and Gordon, D. B. ", Keith Blackburn & Rashmi Sarmah, 2005. This paper presents a theoretical model with micro-foundations that captures some important features of Pakistan's economy which have emerged in sixty-four years of its history. It gives rise to many other issues including poverty, injustice, corruption, lack of competence and literacy rate. Review of Economics and Statistics, 82: 1 – 11. (2006). Journal of Political Economy, 91: 589 – 610. Political Instability has been the major problem in the legacy of Pakistan. ", Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1993. Journal of International Money and Finance, 10: 16 – 48. Macroeconomic Policy in a Two-Party System as a repeated Game. Rogoff, K., and Sibert, A. "Consequences of Political Instability, Governance and Bureaucratic Corruption on Inflation and Growth: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. (1998). ", Blackburn, Keith & Bose, Niloy & Emranul Haque, M., 2006. Inflation and Reputation. (1988). ... ‘Walls Often Fail; They Have Unintended Consequences’ Kenneth R. Rosen Wired May 2, 2019. Pakistan Development Review, 48: 241 – 267. (1992). Rules, Discretion and Reputation in a Model of Monetary Policy. The analysis of the consequences of socio-political instability has been a central theme in recent macroeconomic research, in general, and in the economic growth literature, in particular.There are two different views on the nature of the relationship between political instability and growth. Corruption and the Provision of Health Care and Education Services. Corruption and Growth. Just as there are a number of definitions of political instability, there are also a number of indices designed to measure the level of political instability in countries. Long Swings in the Dollar: Are They in the Data and Do Markets Know It? ", Cukierman, Alex & Edwards, Sebastian & Tabellini, Guido, 1992. 50(4), pages 773-807. Modern Hyper- and High Inflations. Federal Reserve Bank of Minneapolis Quarterly Review, 19: 2 – 11. Tanzi, V., and Davoodi. "Consequences of Political Instability, Governance and Bureaucratic Corruption on Inflation and Growth: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. Acemoglu, D., Johnson, S., Robinson, J. and Thaicharoen, Y. High and Uncertain Inflation: Results from a new dataset. ", Del Monte, Alfredo & Papagni, Erasmo, 2001. Economic Growth in a Cross Section of Countries. Journal of Money, Credit and Banking, 38: 1379 – 1389. Find out more about our Blog. It also allows you to accept potential citations to this item that we are uncertain about. Journal of Time Series Analysis, 7: 51 – 72. The Review of Economic Studies, 59: 645 – 661. Fighting Corruption to Improve Schooling: Evidence from a Newspaper Campaign in Uganda. Engel, c. and Hamilton, J. D. (1990). The countries of Sub-Saharan Africa have experienced both poor economic performance and substantial political instability since their independence. The type of political regime has no impact on the growth of national income, and political instability affects growth only in dictatorships. Africa is naturally rich with resources like minerals, gems, rubber, radioactive elements, foodstuff, etc. You can help correct errors and omissions. (2010). (2010). Second Ed., Oxford University Press, Karachi, Pakistan. Journal of Monetary Economics, 12: 101 – 121. Zaidi, S. A. Inflation in the Theory of Public Finance. that political instability results in fiscal deficits, and this happens because political instability gives the government an incentive to implement a myopic fiscal policy in order to increase its chances of remaining in office. ", Siddiqui, Danish Ahmed & Ahmed, Qazi Masood, 2009. Political instability can be the consequence of either kind of disaster. If there is one thing that business leaders and entrepreneurs hate that is instability in the macro environment. Working Paper No. 12 December 2011 ", M. Idrees Khawaja & Sajawal Khan, 2009. A first approach is to define it as the propensity for regime or government change. (2011). On some economic consequences of political instability - This article considers the channels through which political uncertainty, a global epidemic of late, affects the economy, often with far reaching effects. & Sala-i-Martin, Xavier, 1992. We discussed GDP per capita and their impact on economic growth. Fischer, S., Sahay, R., and Vegh, C. (2002). The resultant negative consequences of political instability in the African countries are the increase of inflation. Political Instability and Economic Development: Pakistan Time-Series Analysis. Time Series Analysis. Journal of Money, Credit, and Banking, 24: 71 – 71. Reforming institutions: Where to Begin? These are individuals who may have difficulties because of their ethnic, cultural, religion belongings or being a member of opposition political groupings in their home countries. Blackburn, K., and Powell, J. R & D Based Models of Economic Growth. Working Paper No. American Economic Review, 83: 409 – 414. 139, International Monetary Fund. Political instability can be caused by many factors, including conflict between rival parties, insufficient resources and the proximity to other nations in conflict. ", Robert E. Hall & Charles I. Jones, 1999. Backus, D., and Driffill, J. Political regimes have greater effects on demography than on economics. Why are stabilization delayed? Cambridge University Press, 2000. The causes and consequences of the French Revolution They reflect the convulsive society of the time. Political stability according to David Sanders is the discontinuity of a system or the frequency of unstable of unstable events in a political system (sanders 1981:49).Political instability has become a common place in Nigeria’s socio-economic and political society due to the heterogeneous background in which she is composed of. Political uncertainty then is not simply media fodder but has wide-ranging and uncertain real world consequences. The American Political Science Review, 71: 1467 – 1487. natural and human-made (FAO/WFP, 2010). American Economic Review, 81: 1170 – 1188. ", Muhammad Ali Choudhary & Muhammad Nadim Hanif & Sajawal Khan & Muhammad Rehman, 2012. (2008). The causal relationship between Institutions and Economic Grwoth: An empirical investigation for Pakistan Economy. It has been a major hurdle in the development of Pakistan. The American Economist, 48: 9 – 16. ", M. Idrees Khawaja & Sajawal Khan, 2009. Panel Number: 74 Panel Chair. Wei, S. (2000). Voting on the budget deficit. Murphy, K. M., Shleifer, A., and Vishny, R.W. Political Business Cycle. Political instability proved to be the most stubborn, with average recovery times of 22.2 months and a minimum of 10 months. Qayyum, A., Khawaja, M. I., and Hyder, A. Causes and Consequences of Political Instability. Aziz Taher/Reuters. Eight Questions about Corruption. ", Alesina, Alberto F & Tabellini, Guido, 1988. An empirical investigation. Public Finance in Models of Economic Growth, Reward structures and the allocation of talent, Reward Structures and the Allocation of Talent, A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle. ", Alesina, Alberto & Drazen, Allan, 1991. Murphy, K. M., Shleifer, A., and Vishny, R.W. Nordhaus, W. D. (1975). It gives rise to many other issues including poverty, injustice, corruption, lack of competence and literacy rate. Journal of Political Economy, 85: 473 – 493. Long Swings in the dollar. Political Instability in Iraq. Instability as a result of high rates of youth unemployment does not aim to change the political regime but can lead to anti-government demonstrations. Romer, P. (1986). Imam, P. A. and Jacobs, D. F. (2007). ", Alberto Alesina & Guido Tabellini, 1988. Ed. The Quarterly Journal of Economics, 106: 407 – 443. ", Cosslett, Stephen R. & Lee, Lung-Fei, 1985. Political Instability and the Concept of Democraticization In Africa Explaining Fiscal Policy and Inflation in Developing Countries. Political instability has become a serious problem especially for the developing and underdeveloped countries. (1993). ", K Blackburn & N Bose & M E Haque, 2003. Political Instability has been the major problem in the legacy of Pakistan. Cukierman, A., Edwards, S., and Tabellini, G. (1992). Aizenman, J. Barro, R. J., and Lee, J. W. (2010). ", Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1991. Timeline: the Rise, Spread, and Fall of the Islamic State. Khan, S. U., and Saqib, O. F. (2011), Political Instability and Inflation in Pakistan. A comparison of Pakistan’s economic performance during different regimes shows that macroeconomic fundamentals tend to show an improvement during the autocratic regimes as compared with those prevailing during democratic regimes. Aghion, P. and Durlauf, P., Amsterdam: Elsevier, 385 – 472. Political instability can be the consequence of either kind of disaster. ", Acemoglu, Daron & Johnson, Simon & Robinson, James A & Thaicharoen, Yunyong, 2002. Blackburn, K., and Forgues-Puccio. ", Huang, Haizhou & Wei, Shang-Jin, 2005. Government spending in a simple model of endogenous growth. Economics of Governance, 9: 341-362. Choudhary, M. A., Hanif, M. N., Khan, S., and Rehman, M. (2010), Procyclical Monetary Policy and Governance. The estimation results based on empirical modelling setup are supportive of the above stylised-facts and also confirm the implications of the theoretical model. & Gordon, David B., 1983. Also, the occurrence of a government change increases the likelihood of subsequent changes. Corruption and Inflation. ", Charles T. Carlstrom & Timothy S. Fuerst, 2000. The problem of political instability generates more serious for a society which is multi In contrast, the economic performance during the democratic regimes has been observed to worsen with weak governance and high levels of corruption, high inflation due partly to reliance on seigniorage to finance public spending, and lacklustre growth. Working Paper No. ", Sala-I-Martin, X. Rahmani, T., and Yousefi, H. (2009). Working Paper No. References listed on IDEAS. Han Dorussen. A Panel Data Analysis. (1991). Aisen, A., and Veiga, F. J. American Economic Review, 82, 537 – 555. A second is to focus on the incidence of political upheaval or violence in a society, such as assassinations, demonstrations, and so forth. Journal of Political Economy, 103: 759 – 84. ", Robert J. Barro & Xavier Sala-i-Martin, 1990. The standard definition of political instability is the propensity of a government collapse either because of conflicts or rampant competition between various political parties. Ghura, D. (1998). ", Alesina, Alberto & Drazen, Allan, 1991. Power Dynamics, Institutional Instability and Economic Growth: The Case of Pakistan. Qureshi, M. N., Ali, K., and Khan, I. R. (2010). Unresolved post secession issues within the SPLM had resulted to political instability and violence thus having negative economic consequences for South Sudan and all the gains the country had made in the past few years vanished after December 15 2013 political upheaval. IMF Staff Papers, 36: 657 – 677. To prove this I perform a two country comparison on Indonesia and Malaysia, focusing on three specific regions; Aceh and Kalimantan, Indonesia and … Cambridge: Cambridge University Press. Journal of Economic Dynamics and Control, 30: 2447-2467. If not, a vicious cycle of instability and uncertainty will most likely persist for decades—with tragic consequences. (2004). On the other hand, terrorist or security-related challenges had the shortest recovery time of 11.5 months and a minimum of two months. ", Ari Aisen & Francisco José Veiga, 2006. ", Patrick A. Imam & Davina F. Jacobs, 2007. Membership. American Economic Review, 75: 530 – 538. ", Aisen, Ari & Veiga, Francisco Jose, 2006. Journal of International Economics, 70: 239 – 252. This cannot but contribute to the entire area’s depressed GDP and resultant political instability. Inflation and Political Instability in Eight Latin American Countries. ", Barro, Robert J. (1977). Section Institutions and Decision-Making. Corruption, Development and Demography. Corruption, Monetary Policy and Inflation: A Cross Country Examination. Phelps, E. (1973). The consequences of the social instability during the 1920s and early 1930s were significant. Putterman Louis The Review of Economic Studies, 55: 1 – 16. Corruption and Military Spending. If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form . ", Stanley Fischer & Ratna Sahay & Carlos A. Vegh, 2002. Hussain, A. Sharp analyses of topical news from a political science perspective, research summaries and the latest expert thinking in a blog format. Our members are universities across the globe and the scholars who work and study within them; membership benefits both the individual and the institution. Gupta S., Davoodi, H. and Tiongson E. (2000). European Journal of Political Economy, 17: 1 – 16. (2000). Reward Structures and the Allocation of Talent. Sharp analyses of topical news from a political science perspective, research summaries and the latest expert thinking in a blog format. Departments of Political Science and Public Administration, Universiteit Leiden. Monetary policies for developing countries: The role of institutional quality. This study contributes to the literature on political instability and economic growth by specifically investigating the impact of political instability on the economic growth of member countries of the Economic Community of West African States (ECOWAS).