Who is afraid of political instability?

An unstable macroeconomic environment is often regarded as detrimental to e conomic growth. Among the sources contributing to such instability, much of the blame has been assigned to political issues. This paper empirically te sts for a causal and negative long-run relation between political instabili ty and economic growth but finds no evidence of such a relationship. Sensit ivity analysis indicates that there is a contemporaneous negative relations hip but also that, in the long run and ignoring institutional factors, the group of African countries plays the determining role. (C) 2002 Elsevier Sc ience B.V. All rights reserved.