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Interdependence in Comparative Politics

Substance, Theory, Empirics, Substance

University of Michigan, Ann Arbor

Jude C. Hays

University of Illinois, Urbana-Champaign

Interdependence is ubiquitous and often central across comparative politics. Indeed, as the authors show first, theoretically, any situation involving externalities from one unit's actions on others' implies interdependence. Positive or negative externalities induce negative or positive interdependence, which spurs competitive races or free riding, with corresponding early or late-mover advantages, and thus strategic rush to act or delay and inaction. The authors show next how to model interdependent processes empirically, how not doing so risks omitted-variable biases favoring domestic and exogenous-external accounts over interdependence, but how doing so naïvely risks simultaneity biases with the opposite substantive implications. They then discuss how to estimate properly specified interdependence models and, finally, how to interpret and present estimated spatio-temporally dynamic effects, response paths, and long-run steady-states, with associated standard errors. They illustrate by replicating a noteworthy earlier, nonspatial study of capital tax competition. Web appendices contain further technical details, literature survey, data, statistical software code, and spreadsheet templates for all suggested procedures.

Key Words: interdependence • spatial econometrics • spatio-temporal-lag model • globalization • tax competition • diffusion • Galton's problem

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