Socio-economic implications of institutional volatility: Theory and evidence from the partition of India

Abstract

The role of institutions in shaping the process of economic growth is a broad topic which has spawned a large volume of research. In particular, it is of great interest to both economists and political scientists. While much of the research has been directed towards outlining how institutions like democracy and dictatorships perform relative to each other, there has been little work on looking at the implications of institutional volatility on economic performance. In particular, one could ask how transitions from a democracy to a dictatorship (and vice versa) could affect the distribution of public finances and investment in public goods which in turn hold serious implications for growth and development. This is precisely the nature of the questions we aim to pose and answer in this project.