Political instability and economic growth in developing economies: some specification empirics

The paper empirically explores the specification of the relationship betwee n political instability (PI) and economic growth, using data on different e vents of coups d'etat in sub-Saharan Africa. It finds that when a principal component of the various PI events is employed in an augmented production function, basic specification tests are met. However, specifying PI using t he separate events, such as 'successful' coups, results in a potentially mi sspecified relationship, reduced model fit, and underestimation of the adve rse PI effect. (C) 2001 Elsevier Science B.V. All rights reserved.