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The social cost of rent seeking in Europe

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Author Info

  • Angelopoulos, Konstantinos
  • Philippopoulos, Apostolis
  • Vassilatos, Vanghelis

Abstract

Direct measurement of the social cost of rent seeking is impeded by non-observable and non-reported activities. We use a dynamic stochastic general equilibrium model to compute the social cost of rent seeking in Europe. Our estimate is based on competition among interest groups for privileges provided by governments, including income transfers, subsidies, and preferential tax treatment. The model, which is calibrated to the euro area as a whole and also to individual euro member countries for 1980-2003, performs well vis-à-vis the data. We find that significant proportions of GDP are extracted as rents available to be sought by rent seekers.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 25 (2009)
Issue (Month): 3 (September)
Pages: 280-299

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Handle: RePEc:eee:poleco:v:25:y:2009:i:3:p:280-299

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Web page: http://www.elsevier.com/locate/inca/505544

Related research

Keywords: Rent seeking Rent extraction Privilege Taxation Public spending;

References

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Citations

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Cited by:
  1. Di Bartolomeo Giovanni & Acocella Nicola & Tirelli Patrizio, 2013. "The comeback of inflation as an optimal public finance tool," wp.comunite, Department of Communication, University of Teramo 0100, Department of Communication, University of Teramo.
  2. Heinrich Ursprung, 2012. "The evolution of sharing rules in rent seeking contests: Incentives crowd out cooperation," Public Choice, Springer, Springer, vol. 153(1), pages 149-161, October.
  3. Rustam Jamilov, 2013. "Optimal Resource Rent," William Davidson Institute Working Papers Series wp1046, William Davidson Institute at the University of Michigan.
  4. Van Long, Ngo, 2013. "The theory of contests: A unified model and review of the literature," European Journal of Political Economy, Elsevier, Elsevier, vol. 32(C), pages 161-181.
  5. Jacopo Costa & Roberto Ricciuti, 2013. "Sources for the Euro Crisis: Bad Regulation and Weak Institutions in Peripheral Europe," Working Papers, University of Verona, Department of Economics 15/2013, University of Verona, Department of Economics.
  6. Oto-Peralías, Daniel & Romero-Ávila, Diego & Usabiaga, Carlos, 2013. "Does fiscal decentralization mitigate the adverse effects of corruption on public deficits?," European Journal of Political Economy, Elsevier, Elsevier, vol. 32(C), pages 205-231.
  7. Markantonatou, Maria, 2013. "Diagnosis, treatment, and effects of the crisis in Greece: A 'special case' or a 'test case'?," MPIfG Discussion Paper 13/3, Max Planck Institute for the Study of Societies.
  8. Gogos, Stylianos G. & Mylonidis, Nikolaos & Papageorgiou, Dimitris & Vassilatos, Vanghelis, 2014. "1979–2001: A Greek great depression through the lens of neoclassical growth theory," Economic Modelling, Elsevier, Elsevier, vol. 36(C), pages 316-331.
  9. Thomas Moutos & Lambros Pechlivanos, 2013. "The Democratization of Rent Seeking in Greece," CESifo Working Paper Series 4331, CESifo Group Munich.
  10. Kahana, Nava & Klunover, Doron, 2014. "Rent Seeking and the Excess Burden of Taxation," IZA Discussion Papers 8160, Institute for the Study of Labor (IZA).
  11. Alcalde, José & Dahm, Matthias, 2010. "Rent seeking and rent dissipation: A neutrality result," Journal of Public Economics, Elsevier, Elsevier, vol. 94(1-2), pages 1-7, February.
  12. Leibbrandt, Andreas & Sääksvuori, Lauri, 2012. "Communication in intergroup conflicts," European Economic Review, Elsevier, Elsevier, vol. 56(6), pages 1136-1147.
  13. Benjamin Powell, 2012. "Coyote ugly: the deadweight cost of rent seeking for immigration policy," Public Choice, Springer, Springer, vol. 150(1), pages 195-208, January.
  14. Dimitris Papageorgiou, 2014. "BoGGEM: a dynamic stochastic general equilibrium model for policy simulations," Working Papers, Bank of Greece 182, Bank of Greece.
  15. Thaize Challier, M.-Christine, 2010. "Socio-political conflict, social distance, and rent extraction in historical perspective," European Journal of Political Economy, Elsevier, Elsevier, vol. 26(1), pages 51-67, March.
  16. Richard L. Carson, 2009. "On Rent Seeking and Economic Growth," Carleton Economic Papers 09-10, Carleton University, Department of Economics, revised 18 Apr 2013.
  17. Hamilton, Alexander, 2013. "Small is beautiful, at least in high-income democracies: the distribution of policy-making responsibility, electoral accountability, and incentives for rent extraction," Policy Research Working Paper Series 6305, The World Bank.
  18. Katsimi, Margarita & Moutos, Thomas, 2010. "EMU and the Greek crisis: The political-economy perspective," European Journal of Political Economy, Elsevier, Elsevier, vol. 26(4), pages 568-576, December.
  19. Kahana, Nava & Qijun, Liu, 2010. "Endemic corruption," European Journal of Political Economy, Elsevier, Elsevier, vol. 26(1), pages 82-88, March.
  20. Aleksandar Vasilev, 2013. "On the cost of rent-seeking by government bureaucrats in a Real-Business-Cycle framework," Working Papers, Business School - Economics, University of Glasgow 2013_20, Business School - Economics, University of Glasgow.

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