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Hobbes to Rousseau: Inequality, Institutions and Development

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  • Matteo Cervellati
  • Piergiuseppe Fortunato
  • Uwe Sunde

Abstract

This article studies the endogenous evolution of economic and political institutions and the interdependencies with the process of economic development. Favourable economic institutions in the form of a state of law and absence of societal conflict arise in equilibrium. Democracies are neither necessary nor sufficient to implement a state of law, even if they may be instrumental. Efficient oligarchies can emerge and persist supported by the consensus of all groups. A taxonomy of politico-economic equilibria shows the endogenous evolution of institutions depending on economic inequality and natural resource abundance, implying a non-monotonic relationship between inequality and institutional quality. Copyright (C) The Author(s). Journal compilation (C) Royal Economic Society 2008.

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Bibliographic Info

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 118 (2008)
Issue (Month): 531 (08)
Pages: 1354-1384

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Handle: RePEc:ecj:econjl:v:118:y:2008:i:531:p:1354-1384

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