Abstract

How do government budgets affect autocrats' incentives to share or consolidate power? We estimate a dynamic decision problem in which autocrats build their ruling coalitions to maintain power and maximize rents amid fluctuating budgets. Even for unconstrained autocrats, we find that ousting (potential) rivals is costly and, when budgets are tight, reduces their short-term survival prospects. Despite these upfront costs, exclusion has dynamic benefits during periods of prolonged budget contraction: autocrats reduce patronage obligations that they may struggle to afford on a tighter budget, which increases their long-term survival chances and share of spoils. By contrast, budget upswings have lasting positive effects on power sharing. Our counterfactuals indicate that budget shocks comparable to those generated by recent commodity booms increase the probability of inclusive ruling coalitions by over 10 percentage points over 25 years. Case studies of Sudan and Liberia indicate that our model and results describe the tradeoffs and survival strategies of real-world autocrats.