Voracity and Growth
AbstractWe analyse an economy that lacks a strong legal-political institutional infrastructure and is populated by multiple powerful groups. Powerful groups dynamically interact via a fiscal process that effectively allows open access to the aggregate capital stock. In equilibrium, this leads to slow economic growth and a 'voracity effect', by which a shock, such as a terms of trade windfall, perversely generates a more than proportionate increase in fiscal redistribution and reduces growth. We also show that a dilution in the concentration of power leads to faster growth and a less pro-cyclical response to shocks.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2001.
Date of creation: Oct 1998
Date of revision:
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Other versions of this item:
- Philip R. Lane & Aaron Tornell, 1997. "Voracity and Growth," Harvard Institute of Economic Research Working Papers 1807, Harvard - Institute of Economic Research.
- Aaron Tornell & Philip R. Lane, 1998. "Voracity and Growth," NBER Working Papers 6498, National Bureau of Economic Research, Inc.
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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