Although political instability is increasing in established democracies, most of the empirical literature on the relationship between political instability and economic growth focuses on developing countries. To address this research gap, we analyze a panel of 34 advanced economies from 1996 to 2020. To account for the endogenous relationship between economic growth and political instability, we rely on a panel VAR using System GMM as well as on an instrumental variable approach estimated using local projections. First, the results show that GDP is reduced by 4 to 7 % five years after a positive shock of political instability by one standard deviation. Our empirical strategy allows us to identify the transmission mechanisms. In particular, investment is affected the most by political instability, followed by consumption. Second, a one standard deviation increase of economic growth reduces political instability by half a standard deviation five years after the shock.