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Chapter 2 Commodity Price Volatility, Democracy, and Economic Growth

Economic Growth and Development

ISBN: 978-1-78052-396-5, eISBN: 978-1-78052-397-2

ISSN: 1574-8715

Publication date: 1 November 2011

Abstract

We use a new dataset on nonresource GDP to examine the impact of commodity price volatility on economic growth in a panel of up to 158 countries during the period 1970–2007. Our main finding is that commodity price volatility leads to a significant increase in nonresource GDP growth in democracies, but to no significant increase in autocracies. To explain this result, we show that increased commodity price volatility leads to a statistically significant and quantitatively large increase in net national saving in democracies. In autocracies, on the contrary, net national saving decreased significantly. Our results hold true when using indicators capturing the quality of economic institutions in lieu of indicators of political institutions.

Keywords

Citation

Arezki, R. and Gylfason, T. (2011), "Chapter 2 Commodity Price Volatility, Democracy, and Economic Growth", de La Grandville, O. (Ed.) Economic Growth and Development (Frontiers of Economics and Globalization, Vol. 11), Emerald Group Publishing Limited, Bingley, pp. 9-24. https://doi.org/10.1108/S1574-8715(2011)0000011007

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited