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A0824
Title: Political instability and its effect on GDP growth and foreign direct investments Authors:  Dimitrios Asteriou - Hellenic Open University (Greece)
Stefanos Dimitrakopoulos - Oxford Brookes University (United Kingdom) [presenting]
Mike Tsionas - Lancaster University (United Kingdom)
Abstract: Using a panel of 32 countries covering the period 1980-2012, we first study the effects of political instability on GDP per capita growth. To this end, we propose a dynamic panel data factor model with stochastic volatility. The proposed model specification controls for growth volatility, systemic economic uncertainty and international business cycle effects. To estimate the model parameters we use particle Markov Chain Monte Carlo methods. We also extend the analysis to a two-equation simultaneous panel data model in order to examine the effects of political instability on both the GDP per capita growth and foreign direct investments.