The Golden Halo and Political Transitions
Abstract: We propose a new test of Acemoglu and Robinson's model of political transition. We draw upon a hitherto unexplored prediction of the model: a "transfer" to newly established political regimes causes regime instability. We use exogenous variation in such transfers to test the theory. The variations comes from the neighborhood e ects which can be considered to be exogenous from the point of view of each country.