Revolutions as Structural Breaks: The Long-Term Economic and Institutional Consequences of the 1979 Iranian Revolution
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| Format: | Preprint |
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2025
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| _version_ | 1866918009121013760 |
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| author | Garoupa, Nuno Spruk, Rok |
| author_facet | Garoupa, Nuno Spruk, Rok |
| contents | This paper examines whether major political institutional disruptions produce temporary shocks or structural breaks in long-term development. Using the 1979 Iranian Revolution as a natural experiment, we apply the synthetic control method to estimate its causal effect on economic growth and institutional quality. Drawing on a panel of 66 countries from 1950 to 2015, we construct counterfactual trajectories for Iran in the absence of revolutionary change. Our results show a persistent and statistically significant divergence in per capita GDP, institutional quality, and legal constraints on executive power. We perform in-space and in-time placebo tests to rule out confounding events, such as the Iran-Iraq War and international sanctions, and propose confidence interval estimation to address uncertainty in treatment effects. The findings identify the Iranian Revolution as a structural institutional rupture, with implications for the classification of institutional change more broadly. We contribute a generalizable empirical framework for distinguishing between temporary and structural institutional shocks in long-run development. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2505_02425 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Revolutions as Structural Breaks: The Long-Term Economic and Institutional Consequences of the 1979 Iranian Revolution Garoupa, Nuno Spruk, Rok General Economics Economics Applications This paper examines whether major political institutional disruptions produce temporary shocks or structural breaks in long-term development. Using the 1979 Iranian Revolution as a natural experiment, we apply the synthetic control method to estimate its causal effect on economic growth and institutional quality. Drawing on a panel of 66 countries from 1950 to 2015, we construct counterfactual trajectories for Iran in the absence of revolutionary change. Our results show a persistent and statistically significant divergence in per capita GDP, institutional quality, and legal constraints on executive power. We perform in-space and in-time placebo tests to rule out confounding events, such as the Iran-Iraq War and international sanctions, and propose confidence interval estimation to address uncertainty in treatment effects. The findings identify the Iranian Revolution as a structural institutional rupture, with implications for the classification of institutional change more broadly. We contribute a generalizable empirical framework for distinguishing between temporary and structural institutional shocks in long-run development. |
| title | Revolutions as Structural Breaks: The Long-Term Economic and Institutional Consequences of the 1979 Iranian Revolution |
| topic | General Economics Economics Applications |
| url | https://arxiv.org/abs/2505.02425 |