Rent-Seeking Competition from State Coffers: A Calibrated DSGE Model of the Euro Area
AbstractThis paper incorporates an uncoordinated struggle for extra fiscal favors into an otherwise standard Dynamic Stochastic General Equilibrium model. This reflects the popular belief that interest groups compete for privileged transfers and tax treatment at the expense of the general public interest, and so the aggregate economy stagnates. The model is calibrated to the euro area over the period 1980-2003. Our results show that rent-seeking competition can contribute to explaining the European macroeconomic experience. We also get quantitative evidence of the fraction of collected tax revenues grabbed by rent seekers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1644.
Date of creation: 2006
Date of revision:
rent seeking; fiscal policy; real business cycles;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-01-29 (All new papers)
- NEP-DGE-2006-01-29 (Dynamic General Equilibrium)
- NEP-EEC-2006-01-29 (European Economics)
- NEP-MAC-2006-01-29 (Macroeconomics)
- NEP-PBE-2006-01-29 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1990.
"The Allocation of Talent: Implications for Growth,"
NBER Working Papers
3530, National Bureau of Economic Research, Inc.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1990. "The Allocation of Talent: Implicationsfor Growth," University of Chicago - George G. Stigler Center for Study of Economy and State 65, Chicago - Center for Study of Economy and State.
- Torsten Persson & Guido Tabellini, .
"Political Economics and Macroeconomic Policy,"
121, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Torsten Persson & Guido Tabellini, 1997. "Political Economics and Macroeconomic Policy," NBER Working Papers 6329, National Bureau of Economic Research, Inc.
- Persson, Torsten & Tabellini , Guido, 1997. "Political Economics and Macroeconomic Policy," Seminar Papers 630, Stockholm University, Institute for International Economic Studies.
- Persson, Torsten & Tabellini, Guido, 1997. "Political Economics and Macroeconomic Policy," CEPR Discussion Papers 1759, C.E.P.R. Discussion Papers.
- Persson, T. & Tabellini, G., 1997. "Political Economics and Macroeconomic Policy," Papers 630, Stockholm - International Economic Studies.
- Hillman,Arye L., 2009.
"Public Finance and Public Policy,"
Cambridge University Press, number 9780521494267.
- Kevin J. Lansing, 1998. "Optimal Fiscal Policy in a Business Cycle Model with Public Capital," Canadian Journal of Economics, Canadian Economics Association, vol. 31(2), pages 337-364, May.
- Mohtadi, Hamid & Roe, Terry L., 2003.
"Democracy, rent seeking, public spending and growth,"
Journal of Public Economics,
Elsevier, vol. 87(3-4), pages 445-466, March.
- Mohtadi, Hamid & Roe, Terry L., 2001. "Democracy, Rent Seeking, Public Spending And Growth," Bulletins 12981, University of Minnesota, Economic Development Center.
- Mendoza, Enrique G. & Razin, Assaf & Tesar, Linda L., 1994.
"Effective tax rates in macroeconomics: Cross-country estimates of tax rates on factor incomes and consumption,"
Journal of Monetary Economics,
Elsevier, vol. 34(3), pages 297-323, December.
- Enrique G. Mendoza & Assaf Razin & Linda L. Tesar, 1994. "Effective Tax Rates in Macroeconomics: Cross-Country Estimates of Tax Rates on Factor Incomes and Consumption," NBER Working Papers 4864, National Bureau of Economic Research, Inc.
- King, Robert G. & Rebelo, Sergio T., 1999.
"Resuscitating real business cycles,"
Handbook of Macroeconomics,
in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 14, pages 927-1007
- Robert G. King & Sergio T. Rebelo, 2000. "Resuscitating Real Business Cycles," RCER Working Papers 467, University of Rochester - Center for Economic Research (RCER).
- Robert G. King & Sergio T. Rebelo, 2000. "Resuscitating Real Business Cycles," NBER Working Papers 7534, National Bureau of Economic Research, Inc.
- Greenwood, J. & Rogerson, R. & Wright, R., 1993. "Household Production in Real Business Cycle Thoery," RCER Working Papers 347, University of Rochester - Center for Economic Research (RCER).
- Frank Smets & Raf Wouters, 2002.
"An estimated dynamic stochastic general equilibrium model of the euro area,"
Working Paper Research
35, National Bank of Belgium.
- Frank Smets & Raf Wouters, 2003. "An Estimated Dynamic Stochastic General Equilibrium Model of the Euro Area," Journal of the European Economic Association, MIT Press, vol. 1(5), pages 1123-1175, 09.
- Paolo Mauro, 2004.
"The Persistence of Corruption and Slow Economic Growth,"
IMF Staff Papers,
Palgrave Macmillan, vol. 51(1), pages 1.
- Paolo Mauro, 2002. "The Persistence of Corruption and Slow Economic Growth," IMF Working Papers 02/213, International Monetary Fund.
- Kollintzas, Tryphon & Vassilatos, Vanghelis, 2000. "A small open economy model with transaction costs in foreign capital," European Economic Review, Elsevier, vol. 44(8), pages 1515-1541, August.
- Correia, Maria Isabel Horta & Neves, Joao C & Rebelo, Sérgio, 1994.
"Business Cycles in a Small Open Economy,"
CEPR Discussion Papers
996, C.E.P.R. Discussion Papers.
- Klein, Paul, 2000. "Using the generalized Schur form to solve a multivariate linear rational expectations model," Journal of Economic Dynamics and Control, Elsevier, vol. 24(10), pages 1405-1423, September.
- Bennett T. McCallum, 1988. "Real Business Cycle Models," NBER Working Papers 2480, National Bureau of Economic Research, Inc.
- Christiano, Lawrence J & Eichenbaum, Martin, 1992.
"Current Real-Business-Cycle Theories and Aggregate Labor-Market Fluctuations,"
American Economic Review,
American Economic Association, vol. 82(3), pages 430-50, June.
- Lawrence J. Christiano & Martin Eichenbaum, 1990. "Current real business cycle theories and aggregate labor market fluctuations," Discussion Paper / Institute for Empirical Macroeconomics 24, Federal Reserve Bank of Minneapolis.
- Lawrence J. Christiano & Martin Eichenbaum, 1990. "Current real business cycle theories and aggregate labor market fluctuations," Working Paper Series, Macroeconomic Issues 90, Federal Reserve Bank of Chicago.
- Grossman, Herschel I & Kim, Minseong, 1996.
" Predation and Accumulation,"
Journal of Economic Growth,
Springer, vol. 1(3), pages 333-50, September.
- Larry E. Jones & Rodolfo E. Manuelli & Henry E. Siu, 2005. "Fluctuations in Convex Models of Endogenous Growth II: Business Cycle Properties," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(4), pages 805-828, October.
- Park, Hyun & Philippopoulos, Apostolis & Vassilatos, Vanghelis, 2005. "Choosing the size of the public sector under rent seeking from state coffers," European Journal of Political Economy, Elsevier, vol. 21(4), pages 830-850, December.
- Fagan, Gabriel & Henry, Jérôme & Mestre, Ricardo, 2001. "An area-wide model (AWM) for the euro area," Working Paper Series 0042, European Central Bank.
- Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
- Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
- Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 893-921, October.
- Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
- Eggert, Wolfgang & Sørensen, Peter Birch, 2008. "The effects of tax competition when politicians create rents to buy political support," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1142-1163, June.
- Wolfgang Eggert & Peter Birch Sørensen, 2007. "The Effects of Tax Competition when Politicians Create Rents to Buy Political Support," EPRU Working Paper Series 07-04, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Heijdra, B.J. & Ligthart, J.E., 2006.
"The Transitional Dynamics of Fiscal Policy in Small Open Economies,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-199394, Tilburg University.
- Heijdra, Ben J. & Ligthart, Jenny E., 2010. "The Transitional Dynamics Of Fiscal Policy In Small Open Economies," Macroeconomic Dynamics, Cambridge University Press, vol. 14(01), pages 1-28, February.
- Ben J. Heijdra & Jenny Ligthart, 2006. "The Transitional Dynamics of Fiscal Policy in Small Open Economies," CESifo Working Paper Series 1777, CESifo Group Munich.
- J. Stephen Ferris, 2010. "Fiscal Policy from a Public Choice Perspective," Carleton Economic Papers 10-10, Carleton University, Department of Economics.
- Koessler, Frédéric & Forges, Françoise, 2008.
"Long persuasion games,"
Economics Papers from University Paris Dauphine
123456789/179, Paris Dauphine University.
- Francoise Forges & Frédéric Koessler, 2006. "Long Persuasion Games," CESifo Working Paper Series 1669, CESifo Group Munich.
- Francoise Forges & Frederic Koessler, 2006. "Long Persuasion Games," THEMA Working Papers 2006-01, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Konstantinos Angelopoulos & Apostolis Philippopoulos & Vanghelis Vassilatos, 2007. "Rent-seeking competition from state coffers in a calibrated DSGE model of the euro area," Working Papers 2007_29, Business School - Economics, University of Glasgow.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).
If references are entirely missing, you can add them using this form.