POLITICAL-SYSTEMS AND DISTORTIONS - AN EMPIRICAL-STUDY

This paper studies emprically why price distortions are more prevalent in some countries than in others. We find no significant difference b etween democracies and dictatorships, but frequent regime changes redu ce distortions. Political systems (factional-subordinate) that encoura ge redistributive activities (RDA) tend to have more distortions. Allo wing for different effects of RDA in democracies and dictatorships, th ere is a positive and significant effect of RDA on distortions in dict atorships. In democracies, ''distortions- destroying'' lobbying seems more important since no significant relation between RDA and distortio ns can be found.