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Reform Chatter and Democracy (English)

This paper explores the dynamics of media chatter about economic reforms using text analysis from about a billion newspaper articles in 28 languages. The paper shows that the intensity of reform chatter increases during economic downturns. This increase is more significant in democracies. Using instrumental variable techniques, the analysis finds the relationship to be causal. The paper also documents that reform chatter is followed by actual reforms, suggesting that democracies benefit from a "self-correcting" mechanism stemming from changing popular attitudes toward reform.


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    Arezki,Rabah, Djankov,Simeon, Nguyen,Ha Minh, Yotzov,Ivan Victorov

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    Policy Research Working Paper

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    The World Region,

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  • Doc Name

    Reform Chatter and Democracy

  • Keywords

    terms of trade shock; political economy of reform; commodity price shock; political business cycle; economic reform; measure of reform; financial market; effect on consumption; country fixed effect; use of text; principal component analysis; real interest rate; mean growth; democracy and reform; international commodity price; regulation of entry; law and economics; global financial crisis; imports of commodity; export commodity prices; trade and investment; lower income countries; political competition; newspaper article; democratic country; standard error; local source; robustness check; media coverage; cyclical component; instrumental variable; net export; domestic reform; human capital; economic shock; aggregate index; world regions; high frequency; composite index; english language; sample period; alternative measure; budget cycle; gross exports; reform components; machine learning; baseline regression; Economic Policy; press freedom; composite measure; econometric theory; average score; government responsiveness; education attainment; domestic finance; local ones; capital account; agricultural regulation; regression table; econometric analysis; stock market; constant price; federal reserve; executive power; economic study; Economic Studies; economic slowdown; political arena; executive branch; political regime; causal relationship; positive relationship; Boosting Growth; policy prescriptions; global shocks; positive value; unobserved variable; empirical specification; economic crisis; simple average; commodity export; price taker; exclusion restriction; first stage; democracy index; time t; endogenous variable; negative coefficient; positive correlation; positive coefficient; Business Regulation; lag effect; business environment; construction permit; exogenous growth; minority investor; pay taxes; across border; Efficiency Enhancing; predictive power; public policy; industry code; development policy; language divide; open access; political feasibility; market fluctuation; present evidence; politically active; pioneering work; political debate; democratic politics; macroeconomic cycle; government ownership; political outcome; economic freedom; Research Support; electoral cycle



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Arezki,Rabah Djankov,Simeon Nguyen,Ha Minh Yotzov,Ivan Victorov

Reform Chatter and Democracy (English). Policy Research working paper,no. WPS 9319 Washington, D.C. : World Bank Group.