Policy Determination under Non-democratic Regimes : A Game-theoretic Political Economy Approach

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(1) I make a new index of(geo) political instability using the data of international conflicts after World War II and demonstrate that the index has a strong positive correlation to the growth rate of each non-democratic country.(2) Constructing a political economy model in which political elite strategically use redistributive policy in order to suppress masses' protests, I demonstrate that the rate of returns on physical capital, the strength of bequest motive, and the amount of human capital endowment are critical factors that determine whether the adopted policies are growth-enhancing or growth-suppressing in non-democratic countries.(3) Using a political economy model of preferential taxation, I demonstrate that such a discriminatory policy induced by political cronyism causes a domino reaction of inefficient factor movements, which may generate expectation-driven multiple equilibria and economic instability.