Revolutions as structural breaks: the long-term economic and institutional consequences of the 1979 Iranian Revolution
Authors:
- Nuno Garoupa, George Mason University, Fairfax
- Rok Spruk, University of Ljubljana, School of Economics and Business
Keywords:
Synthetic control method | Institutional change | Long-run development | Iran
Abstract:
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.
The Sustainable Development Goals (SDGs) addressed in the article are:
- SDG 5 – Gender equality
- SDG 8 – Decent work and economic growth
- SDG 10 – Reduced inequality
- SDG 16 – Peace, justice and strong institutions
The article is published in:
Constitutional political economy (Springer Nature)
The content is freely accessible at:
Revolutions as structural breaks: the long term economic and institutional consequences of the 1979 Iranian Revolution
