On Dictatorship, Economic Development and Stability



A Proof of proposition 2

The dynamical system of the dictatorship without insurrection threat is characterized by
these two equations:

kt= 1 + β(1 - τt)(1 - α)Ak'l'

(33)

(34)


_                          α σ τtkf(1 -σ )(1 -α )

Tt +1                                                           a ( σ-1)

/            ∖ 1 ,             ι 1 + a ( σ— 1) /ɔ .             . .        σ

(1 + ρ )σ (1 - τt ) σ     1+β (1 - α ) A

The linearized system is:

kt+1 - k

τt+1 - T


J.


kt
τt


with


α 1+(1 - τ)(1 - a)Akα 1


- 1+β(1 - α ) Ak a


α1+ - (1 )(1 -σ)τкa(11)(1—a)1

1 z β           . a(σ-1)        1 + a(σ-1)

(1+ρ)σ ( ɪ(1 -α)α)   σ   (1 -τ)    σ


α 1 ka(1 1)(1 — a)(1+ 1 + a σ 1) τ)


1/ Я            a a(°~1)         1 + a(σ—1),1

(1+P)σ ( 1⅛ (1 )A)   σ   (1 )    σ +1


Replacing k and τ by their expressions, we can make some simplifications:

- i⅛(1 - α ) A

a
βα(1 )A1—a
(1+ β )(1+ ρ ) J

J=


α (1 - α )( σ-Γ )


1 - OL-

1 1+ρ_____

1


β βa (1 — a) A ʌ 1 — a
( (1+ β)(1+ρ) )


1+ P
α


(1 -a)(σ- 1) Z 1+ ρ - β
σ α J


39




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