Finite Horizons, Political Economy, and Growth
AbstractThis paper analyzes the political economy of growth when agents and the government have finite horizons and equilibrium growth is inefficient. A "representative" government (i.e. one whose preferences reflect those of its constituents) endowed merely with the ability to tax and transfer can improve somewhat on the market allocation, but cannot achieve first-best growth. Efficiency requires in addition the ability to bind future governments. We argue that this ability is related to political stability, and provide empirical evidence that stability and growth-related policies (namely education) are meaningfully related. (Copyright: Elsevier)
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Bibliographic InfoArticle provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.
Volume (Year): 4 (2001)
Issue (Month): 1 (January)
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Other versions of this item:
- Kahn, J.A. & Lim, J.S., 1996. "Finite Horizons, Political Economy, and Growth," RCER Working Papers 433, University of Rochester - Center for Economic Research (RCER).
- James A. Kahn & Jong-Soo Lim, 2000. "Finite horizons, political economy, and growth," Staff Reports 102, Federal Reserve Bank of New York.
- D9 - Microeconomics - - Intertemporal Choice
- H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
- O5 - Economic Development, Technological Change, and Growth - - Economywide Country Studies
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