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Cabinet Duration in Latin American Presidential Democracies
Unformatted Document Text:  Economic Variables 20 Economic crisis is an exogenous economic shock that is measured by the average of annual crude oil price for each cabinet. Oil prices are hard to predict since they depend on many unexpected political and economic factors. When oil prices skyrocket, most domestic industries are severely hurt by the increased cost of purchasing oil. According to the events process theorists, such an unpredicted economic crisis is highly likely to dissolve the cabinet . The oil price is inflation adjusted (for 2006) dollars per barrel, and it varies from 12.66 to 66.20, with a mean of 25.95. Economic performance of the cabinet is measured by averaging annual growth rates of GDP per capita during each cabinet. The performance of a cabinet in significant policy areas, such as the economy, may be one of the most important factors that affect the stability of the cabinet. For instance, if a government significantly improves the country’s economic situation or is successful in dealing with a recession, the popularity of the president will be high, which will provide the coalition partners with a good incentive to remain in the cabinet. Therefore, even when a serious economic crisis strikes a country (as occurred in many Latin American countries), if the cabinet promptly overcomes the crisis, the cabinet may be sustained. This measure varies from -10.9 to 31.7, with a mean of 3.7. GDP per capita could explain the duration of cabinets. Relatively poor countries may have more incentive to change the cabinet to boost their economy, given that the GDP growth rate is the same across countries. Annual GDPs per capita are logged and averaged for each cabinet. It varies from 2.552 to 4.096, with a mean of 3.512. 20 The GDP per capita is obtained from the Penn World Table (http://pwt.econ.upenn.edu/php_site/pwt62/pwt62_form.php). The annual average crude oil price is obtained from www.inflationdata.com whose sources are the US Department of Energy, www.economagic.com and www.imperialoil.com (http://inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp). 15

Authors: Shin, Jae Hyeok.
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Economic Variables
Economic crisis is an exogenous economic shock that is measured by the average of
annual crude oil price for each cabinet. Oil prices are hard to predict since they depend on many
unexpected political and economic factors. When oil prices skyrocket, most domestic industries
are severely hurt by the increased cost of purchasing oil. According to the events process
theorists, such an unpredicted economic crisis is highly likely to dissolve the cabinet . The oil
price is inflation adjusted (for 2006) dollars per barrel, and it varies from 12.66 to 66.20, with a
mean of 25.95.
Economic performance of the cabinet is measured by averaging annual growth rates of
GDP per capita during each cabinet. The performance of a cabinet in significant policy areas,
such as the economy, may be one of the most important factors that affect the stability of the
cabinet. For instance, if a government significantly improves the country’s economic situation or
is successful in dealing with a recession, the popularity of the president will be high, which will
provide the coalition partners with a good incentive to remain in the cabinet. Therefore, even
when a serious economic crisis strikes a country (as occurred in many Latin American countries),
if the cabinet promptly overcomes the crisis, the cabinet may be sustained. This measure varies
from -10.9 to 31.7, with a mean of 3.7.
GDP per capita could explain the duration of cabinets. Relatively poor countries may
have more incentive to change the cabinet to boost their economy, given that the GDP growth
rate is the same across countries. Annual GDPs per capita are logged and averaged for each
cabinet. It varies from 2.552 to 4.096, with a mean of 3.512.
20
The GDP per capita is obtained from the Penn World Table
(http://pwt.econ.upenn.edu/php_site/pwt62/pwt62_form.php). The annual average crude oil price is obtained from
www.inflationdata.com whose sources are the US Department of Energy, www.economagic.com and
www.imperialoil.com (http://inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp).
15


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