How Budgets Shape Autocrats' Survival Strategies

Abstract

What are the effects of budget shocks and volatility on autocrats’ incentives to include rival groups in their ruling coalitions? We construct and estimate a dynamic model of an autocrat who adjusts the composition of his coalition to maintain power and maximize rents in the face of volatile budgetary resources. A dynamic tension arises because the leader worries about adopting an inclusive cabinet that may later be unsustainable should their fiscal position worsens. We estimate the effect of inclusive or exclusive coalitions on the leader’s office benefits and likelihood of survival and analyze counterfactuals that illustrate the model’s long-term dynamics. Budget upswings comparable in magnitude to the increases generated by recent commodity booms have lasting effects on the likelihood that autocrats adopt inclusive governing coalitions increasing the probability by 10 percentage points after twenty or even forty years.

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