Revolutions as structural breaks : the long-term economic and institutional consequences of the 1979 Iranian Revolution

Garoupa, Nuno (author), Spruk, Rok (author)

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.

• Language: English
• Keywords: economic policy, economic history, quantitative analysis, synthetic control method, institutional change, long-run development, Iran
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication status: Published
• Publication version: Version of Record
• Year: 2025
• Number of pages: Str. 273-301
• Numbering: Vol. 36, iss. 3
• PID: 20.500.12556/RUL-177786
• UDC: 330.1
• ISSN on article: 1043-4062
• DOI: 10.1007/s10602-025-09471-6
• COBISS.SI-ID: 238406915
• Publication date in RUL: 07.01.2026

Record is a part of a journal

• Title: Constitutional political economy
• Shortened title: Const. polit. econ.
• Publisher: Springer Nature
• ISSN: 1043-4062
• COBISS.SI-ID: 512084761

Licences

• License: CC BY 4.0, Creative Commons Attribution 4.0 International
• Link: http://creativecommons.org/licenses/by/4.0/
• Description: This is the standard Creative Commons license that gives others maximum freedom to do what they want with the work as long as they credit the author.

Secondary language

• Language: Slovenian
• Keywords: ekonomska politika, ekonomska zgodovina, kvantitativna analiza