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Do Regional Politics Matter for Regional Growth?

Lippe, Jesper LU (2020) NEKP01 20201
Department of Economics
Abstract
This paper estimates the relationship between political instability and economic growth at the
regional level. A panel of Swedish regions over the time frame 1994-2018 is used to conduct
the empirical analysis. The empirical analysis consists of regressing regional growth rates in
GDP per worker on a measure of political instability and a set of control variables. Growth rates
are measured over a 4-year period that coincides with the election period. Political instability is
measured in three different ways. That is, if the region is ruled by a minority government, if the
region is ruled by an ideological mix of parties, and the number of parties ruling the regional
government. An analysis at the municipal level is also conducted,... (More)
This paper estimates the relationship between political instability and economic growth at the
regional level. A panel of Swedish regions over the time frame 1994-2018 is used to conduct
the empirical analysis. The empirical analysis consists of regressing regional growth rates in
GDP per worker on a measure of political instability and a set of control variables. Growth rates
are measured over a 4-year period that coincides with the election period. Political instability is
measured in three different ways. That is, if the region is ruled by a minority government, if the
region is ruled by an ideological mix of parties, and the number of parties ruling the regional
government. An analysis at the municipal level is also conducted, where population-weighted
shares of the political instability-variables and their effect on regional growth rates are investigated. The results of the empirical analysis are that political instability at the regional and
municipal levels has no significant effect on regional growth rates, suggesting a weak relationship. When extending the time frame to cover 1973-2018 and investigating if regions ruled by
governments with single-party majority experienced higher growth rates, a significantly positive effect at the 10%-level was found for the share of municipalities within the region with a
single-party majority. This indicates that, even though results, in general, are insignificant and
inconclusive, it might be worth conducting the same analysis in the future, when more data is
available. (Less)
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author
Lippe, Jesper LU
supervisor
organization
course
NEKP01 20201
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Economic growth, political instability, Sweden, regions, municipalities
language
English
id
9028377
date added to LUP
2021-03-11 12:20:32
date last changed
2021-03-11 12:20:32
@misc{9028377,
  abstract     = {This paper estimates the relationship between political instability and economic growth at the
regional level. A panel of Swedish regions over the time frame 1994-2018 is used to conduct
the empirical analysis. The empirical analysis consists of regressing regional growth rates in
GDP per worker on a measure of political instability and a set of control variables. Growth rates
are measured over a 4-year period that coincides with the election period. Political instability is
measured in three different ways. That is, if the region is ruled by a minority government, if the
region is ruled by an ideological mix of parties, and the number of parties ruling the regional
government. An analysis at the municipal level is also conducted, where population-weighted
shares of the political instability-variables and their effect on regional growth rates are investigated. The results of the empirical analysis are that political instability at the regional and
municipal levels has no significant effect on regional growth rates, suggesting a weak relationship. When extending the time frame to cover 1973-2018 and investigating if regions ruled by
governments with single-party majority experienced higher growth rates, a significantly positive effect at the 10%-level was found for the share of municipalities within the region with a
single-party majority. This indicates that, even though results, in general, are insignificant and
inconclusive, it might be worth conducting the same analysis in the future, when more data is
available.},
  author       = {Lippe, Jesper},
  keyword      = {Economic growth,political instability,Sweden,regions,municipalities},
  language     = {eng},
  note         = {Student Paper},
  title        = {Do Regional Politics Matter for Regional Growth?},
  year         = {2020},
}