The paper by Daron Acemoglu and James A. Robinson explores the persistence of economic institutions despite frequent changes in political institutions. They argue that the form of economic institutions is determined by the balance between de jure (legal) and de facto (actual) political power. In a baseline model, changes in political institutions do not affect the stochastic equilibrium distribution of economic institutions, leading to a form of persistence called "invariance." However, when the model is extended to include constraints on de facto power or costs of changing economic institutions, the equilibrium becomes a Markov regime-switching process with state dependence. In a more complex model, the paper introduces "captured democracy," where democratic regimes may persist but favor economic institutions that benefit elites. The authors use historical examples from the U.S. South, Latin America, and Liberia to illustrate these concepts. They show that even in democracies, elites can maintain power through de facto means, leading to institutions that favor them. The paper also discusses how institutional persistence can be broken through reforms that limit elite de facto power or alter the economic structure. Overall, the study highlights the complex interplay between political and economic institutions and the role of elites in maintaining power.The paper by Daron Acemoglu and James A. Robinson explores the persistence of economic institutions despite frequent changes in political institutions. They argue that the form of economic institutions is determined by the balance between de jure (legal) and de facto (actual) political power. In a baseline model, changes in political institutions do not affect the stochastic equilibrium distribution of economic institutions, leading to a form of persistence called "invariance." However, when the model is extended to include constraints on de facto power or costs of changing economic institutions, the equilibrium becomes a Markov regime-switching process with state dependence. In a more complex model, the paper introduces "captured democracy," where democratic regimes may persist but favor economic institutions that benefit elites. The authors use historical examples from the U.S. South, Latin America, and Liberia to illustrate these concepts. They show that even in democracies, elites can maintain power through de facto means, leading to institutions that favor them. The paper also discusses how institutional persistence can be broken through reforms that limit elite de facto power or alter the economic structure. Overall, the study highlights the complex interplay between political and economic institutions and the role of elites in maintaining power.