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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.

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  • Matteo Cervellati & Piergiuseppe Fortunato & Uwe Sunde, 2008. "Hobbes to Rousseau: Inequality, Institutions and Development," Economic Journal, Royal Economic Society, vol. 118(531), pages 1354-1384, August.
    • Handle: RePEc:wly:econjl:v:118:y:2008:i:531:p:1354-1384
    DOI: 10.1111/j.1468-0297.2008.02173.x
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    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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