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Take the money and run: Political turnover, rent-seeking and economic growth

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  • Caporale, Tony
  • Leirer, Jonathan

Abstract

We find a negative and significant relationship between gubernatorial turnover and U.S. state economic growth. Although our finding of an inverse relationship between growth and political instability may seem to contradict Olson's (1982a) famous hypothesis regarding the growth retarding nature of political stability, such constitutional political changes were not primarily what Olson had in mind. We argue that enhanced political turnover is associated with more rent-seeking since payoffs to focusing on special interest (redistributive) policies vs. general (growth enhancing) ones are greater for less durable regimes. Therefore, we interpret our evidence as supportive of Olson's broader argument concerning the negative affect of rent-seeking behavior on growth.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 76 (2010)
Issue (Month): 2 (November)
Pages: 406-412

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Handle: RePEc:eee:jeborg:v:76:y:2010:i:2:p:406-412

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Web page: http://www.elsevier.com/locate/jebo

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Keywords: Political instability Economic growth;

References

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  1. Barro, Robert J, 1996. " Democracy and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 1-27, March.
  2. Glaeser, Edward L. & Scheinkman, JoseA. & Shleifer, Andrei, 1995. "Economic growth in a cross-section of cities," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 117-143, August.
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  8. Wallis, John Joseph & Oates, Wallace E, 1988. "Does Economic Sclerosis Set in with Age? An Empirical Study of the Olson Hypothesis," Kyklos, Wiley Blackwell, vol. 41(3), pages 397-417.
  9. J. Barkley Rosser Jr, 2007. "The Rise and Decline of Mancur Olson's View of The Rise and Decline of Nations," Southern Economic Journal, Southern Economic Association, vol. 74(1), pages 4-17, July.
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  15. Quiggin, John, 1992. "Testing the Implications of the Olson Hypothesis," Economica, London School of Economics and Political Science, vol. 59(235), pages 261-77, August.
  16. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-63, September.
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Cited by:
  1. Cole, Ismail M., 2014. "Short- and long-term growth effects of special interest groups in the U.S. states: A dynamic panel error-correction approach," MPRA Paper 54455, University Library of Munich, Germany, revised 02 Mar 2014.

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