An Economic Theory of Leadership Turnover (ABSTRACT)
Maria Gallego and Carolyn Pitchik
published: 2004 | Research publication | Refereed Journals - Economics
Gallego, M. & Pitchik, C. (2004). "An Economic Theory of Leadership Turnover". Journal of Public Economics, 88 (12), pp. 2361-2382.
ABSTRACT: In an infinite-horizon stochastic model, a coup not only disciplines a dictator's policy towards a group of "kingmakers", but also enables a kingmaker to become a dictator. Greater competition for the dictator's position, a lower impact of the dictator's policy on the kingmakers, or lower risks of staging a coup raises the benefit of a coup relative to its opportunity cost and so raises the probability of a coup. Since periodic shocks affect the efficacy of the dictator's policy, a bad enough shock makes it too costly for even talented dictators to avert a coup. More talented dictators are able to survive more negative shocks, so the worst shock in a dictator's reign is informative about the probability of a coup. Conditional on the worst shock, the probability of a coup is independent of a dictator's duration in office. The unconditional probability declines with duration.
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revised Jan 12/06
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