Interest groups, democracy, and policy volatility

Democratic polities appear to produce more stable policy than do autocracies. In this paper, we explore a potential source of the policy stability observed in democracies: special-interest groups. We find that interest groups are associated with greater stability in some measures of policy and that groups mediate the stabilizing impact of democracy on policy. We also find that the impact of interest groups on policy volatility depends on the degree of polarization in a society. (JEL PI6, 043, D7)
I. INTRODUCTION Empirical evidence suggests democratic polities produce more stable policy than do autocracies. For example, Henisz (2004) finds that democracy is associated with more stable fiscal policy, and Dutt [...]