Growth dynamics and development : essays in applied econometrics and political economy

How do political institutions affect economic crises? And, how much does poverty react to changes in average income and distribution? This dissertation answers these questions in two parts. Part one shows that negative regime changes affect the probability of economic crises, and outlines a theory illustrating how the duration of economic declines depends on the strength of political institutions and ethnic heterogeneity. Part two looks at growth, distribution and poverty. It illustrates a new empirical framework for analyzing the speed of poverty reduction and applies this framework to study an important policy question, namely: will extreme poverty end by 2030? It shows that the pace of poverty reduction will slow down. An optimistic scenario suggests a poverty rate of 8-9 per cent, far short of the World Bank’s new 3 per cent target.