Winners Never Quit, Quitters Never Grow : Using Text Mining to Measure Policy Volatility and its Link with Long-Term Growth in Latin America
Although there is wide recognition of the negative consequences of policy volatility for countries' long-term economic growth, there is limited empirical work on this subject. One of the reasons is the difficulty of measuring policy volatility...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/634591516387264234/Winners-never-quit-quitters-never-grow-using-text-mining-to-measure-policy-volatility-and-its-link-with-long-term-growth-in-Latin-America http://hdl.handle.net/10986/29220 |
| Summary: | Although there is wide recognition of
the negative consequences of policy volatility for
countries' long-term economic growth, there is limited
empirical work on this subject. One of the reasons is the
difficulty of measuring policy volatility over long periods
of time, especially in developing countries. This paper
contributes to this literature by constructing a proxy for
policy volatility that exploits the information content of
the priorities conveyed in presidential speeches. The study
creates a policy volatility measure using a Latent Dirichlet
Allocation algorithm on a novel data set of 953 presidential
speeches in 10 Latin American countries and Spain. The paper
shows that the proxy for policy volatility is negatively
correlated with long-term growth over 1940-2010. The results
are robust to a large set of changes in the construction of
the proxy for policy volatility. |
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