Financial Liberalization: Stable Autocracies and Constrained Democracies

Why do autocratic rulers liberalize financial markets? This article shows how autocrats use financial liberalization for two distinct purposes. First, autocrats may use liberalization to bolster the economy, making revolution less attractive to the political opposition and stabilizing the autocracy. Second, when stabilization of the autocracy is too costly, autocrats may use liberalization to make assets more mobile. Mobility provides elite...