Alternative Models of
Dynamics in Binary TimeSeries—Cross-Section Models:
The Example of State Failure
Nathaniel Beck, David Epstein,
Simon Jackman & Sharyn O’Halloran
The Problem of State Failure
Question: Why do countries “fail”?
Is it a function of political, social or
economic conditions?
Ultimately, can we predict failure and take
steps to prevent it?
CW: The factors which induce failure
are not the same ones that alleviate it
Theoretical hook: basis of rule of law
Emory, 7/20/01
Beck, Epstein, Jackman & O'Halloran
2
Failure Definition
Sample: 147 countries from 1955-97
States can fail in any of 4 ways:
Revolutionary War (50 episodes/359 case-years)
Ethnic War (60 episodes/692 case-years)
Adverse Regime Change (87 episodes/255 case-years)
Genocide/Politicide (36 episodes/265 case-years)
Dependent variable is coded as a 1 if any
of these failure modes is present
Emory, 7/20/01
Beck, Epstein, Jackman & O'Halloran
3
Summary Statistics on Failure
Total of 4596 country-years in study
Non-rectangular due mainly to appearance
and disappearance of states over time
18.47% of all country-years are failures
68 countries (46%) had no failures
4 countries had only failures
IV’s: trade openness, democracy, infant
mortality, population density
Emory, 7/20/01
Beck, Epstein, Jackman & O'Halloran
4
New & Total Failures, 1955-97
40
35
30
Failures
25
20
New Failures
Total Failures
15
10
5
0
1955
1960
1965
1970
1975
1980
1985
1990
1995
Year
Emory, 7/20/01
Beck, Epstein, Jackman & O'Halloran
5
Probit Analysis
1
y* = xb + e, Probit: 1(0,1)
P(y=1) = Probit(y*)
½
0
The Standard Case
Emory, 7/20/01
Beck, Epstein, Jackman & O'Halloran
6
Probit Analysis
1
Probit(xb´)
½
0
Impact of Changing b
Emory, 7/20/01
Beck, Epstein, Jackman & O'Halloran
7
Probit Analysis
1


P y1  1  P y1*  0  Pe1   x1b 
½
0
Error Terms for MLE
Emory, 7/20/01
Beck, Epstein, Jackman & O'Halloran
8
Probit Analysis
1
½
0
t=1
2
3…
T
Time Series
Emory, 7/20/01
Beck, Epstein, Jackman & O'Halloran
9
Probit Analysis – Time Series Cross Section
1
½
0
1
½
0
1
½
0
1
½
0
Country 1
Country 2
Country 3
Country 4
Probit Analysis
1
½
0
Restricted Transition Model (LDV)
Emory, 7/20/01
Beck, Epstein, Jackman & O'Halloran
11
Probit Analysis
1
y* = Probit(xb+r)
½
y* = Probit(xb)
0
Restricted Transition Model (LDV)
Emory, 7/20/01
Beck, Epstein, Jackman & O'Halloran
12
Probit Analysis
1
y* =
Probit(xb1+r)
½
y* =
Probit(xb2)
0
Full Transition Model
Emory, 7/20/01
Beck, Epstein, Jackman & O'Halloran
13
Probit Analysis
1
½
0
Lagged Latent Model
Emory, 7/20/01
Beck, Epstein, Jackman & O'Halloran
14