Economic Growth and Decline with Endogenous Property Rights
AbstractThis article introduces endogenous institutional change into a neoclassical growth model. For some parameter values, all Markov perfect equilibria involve a shift from common property to private property followed by a shift back to common property. Even in the presence of a linear production technology, this sequence of switches generates growth rates that are increasing at low levels of capital and decreasing at high levels of capital. This result rationalizes the hump-shaped growth path followed by some countries through history, as well as the conditional convergence observed in postwar data. For other parameter values, there are also equilibria in which common property prevails forever. This result rationalizes the low-growth traps in which many poor countries find themselves. Copyright 1997 by Kluwer Academic Publishers
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Bibliographic InfoArticle provided by Springer in its journal Journal of Economic Growth.
Volume (Year): 2 (1997)
Issue (Month): 3 (September)
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Web page: http://www.springerlink.com/link.asp?id=102931
Other versions of this item:
- Aaron Tornell, 1995. "Economic Growth and Decline with Endogenous Property Rights," Harvard Institute of Economic Research Working Papers 1739, Harvard - Institute of Economic Research.
- Aaron Tornell, 1993. "Economic Growth and Decline with Endogenous Property Rights," NBER Working Papers 4354, National Bureau of Economic Research, Inc.
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