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Policy Persistence and Rent Extraction

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  • Silke Friedrich

Abstract

The existing literature has shown that special interest groups can have both growthenhancing and retarding effects on an economy. In either case it is always assumed thatthe nature of the special interest groups remains constant over time. The hypothesis ofthis paper is that a dynamic relationship exists between politicians and lobbyists. A theoreticalframework in which established and new lobbies overlap is developed to modelthe incentives a government might have to behave in a manner consistent with thehypothesis. In this structure despite the fact that they support projects from which allproductive benefits have been extracted politicians are still rationally reelected.

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Bibliographic Info

Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 110.

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Date of creation: 2011
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Handle: RePEc:ces:ifowps:_110

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Keywords: Lobby; special interest; efficiency; elections;

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References

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  1. Aidt, T. & Dutta, J. & Loukoianova, E., 2003. "Policy Myopia," Cambridge Working Papers in Economics 0344, Faculty of Economics, University of Cambridge.
  2. James E. Anderson, 1997. "The Uruguay Round and Welfare in Some Distorted Agricultural Economies," NBER Working Papers 5923, National Bureau of Economic Research, Inc.
  3. Le Breton, Michel & Salanie, Francois, 2003. "Lobbying under political uncertainty," Journal of Public Economics, Elsevier, vol. 87(12), pages 2589-2610, December.
  4. Aidt, T. & Hillman, A., 2008. "Enduring Rents," Cambridge Working Papers in Economics 0802, Faculty of Economics, University of Cambridge.
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Cited by:
  1. Christian Grimme & Steffen Henzel & Elisabeth Wieland, 2011. "Inflation uncertainty revisited: A proposal for robust measurement," Ifo Working Paper Series Ifo Working Paper No. 111, Ifo Institute for Economic Research at the University of Munich.
  2. Silke Friedrich, 2013. "Policy Persistence and Rent Extraction," CESifo Working Paper Series 4325, CESifo Group Munich.

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