Why do sudden and massive social, economic, and political changes occur when and where they do? Are there institutional preconditions that encourage such changes when present and discourage such changes when absent? I employ a general model which suggests that cascades which induce massive equilibrium changes are more likely to occur in regimes with centralized coercive power, defined as the ability to impose more than one type of sanction (economic, legal, political, social, or religious). Centralized authorities are better able to suppress subversive actions when external shocks are small, as citizens have little incentive to incur numerous types of sanctions. However, citizens are also more likely to lie about their internal preferences in such regimes (e.g., falsely declare loyalty to an oppressive government), entailing that larger shocks are more likely to trigger a cascade to a vastly different equilibrium. The model is applied to the severity of protests that followed austerity measures taken in developing nations since the 1970s.
Rubin, Jared. "Centralized institutions and cascades." Journal of Comparative Economics 42.2 (2014): 340-357.
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NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Comparative Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Comparative Economics, volume 42, issue 2, in 2014. DOI: 10.1016/j.jce.2013.11.002
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