Income and Democracy: A Smooth Varying Coefficient Redux | Zendy

Lundberg Alexander L. | Zendy; Huynh Kim P. | Zendy; JachoChávez David T. | Zendy

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Income and Democracy: A Smooth Varying Coefficient Redux

Author(s) -

Lundberg Alexander L.,

Huynh Kim P.,

JachoChávez David T.

Publication year - 2016

Publication title -

journal of applied econometrics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 2.878

H-Index - 99

eISSN - 1099-1255

pISSN - 0883-7252

DOI - 10.1002/jae.2536

Subject(s) - redux , democracy , economics , parametric statistics , econometrics , class (philosophy) , panel data , test (biology) , mathematical economics , mathematics , computer science , statistics , political science , politics , law , paleontology , artificial intelligence , engineering , biology , aerospace engineering

Summary Acemoglu et al. ( American Economic Review 2008; 98 : 808–842) find no effect of income on democracy when controlling for fixed effects in a dynamic panel model. Work by Moral‐Benito and Bartolucci ( Economics Letters 2012; 117 : 844–847) and Cervellati et al. ( American Economic Review 2014; 104 : 707–719) suggests that the original model might have been misspecified and proposes alternative specifications instead. We formally test these parametric specifications by implementing Lee's ( Journal of Econometrics 2014; 178 : 146–166) dynamic panel test of linear parametric specifications against a general class of nonlinear alternatives robustly and reject all these specifications. However, using a more flexible model proposed by Cai and Li ( Econometric Theory 2008; 24 : 1321–1342) we find that the relationship between income and democracy appears to be mediated by education, but results are not statistically significant. Copyright © 2016 John Wiley & Sons, Ltd.

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