Decreaseing turnout - a blessing or a curse?

Abstract: This essay presents empirical tests of one of the conclusions from Bryan Caplan's 2007 book The Myth of the Rational Voter. Caplan claims that voters suffer from systematic biases about economic policy that through elections affects economic policy negatively. I derive three hypotheses from Caplan's theory and test them on a cross-country panel of 19 countries covering the time 1973 to 2009. The hypotheses stipulate that increased turnout lead to lower economic freedom, lower levels of foreign aid and higher inflation. After controlling for country specific effects turnout does not seem to have the effect stipulated in the three hypotheses.