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Political Institutions and Economic Growth

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Author Info
Marsiliani, Laura
Renström, Thomas I
Abstract

We analyze the impact of micro-founded political institutions on economic growth in an overlapping-generations economy, where individuals differ in preferences over a public good (as well as in age). Labour and capital taxes finance the public good and a public input. The benchmark institution is a parliament, where all decisions are taken. Party entry, parliamentary composition, coalition formation, and bargaining are endogenous. We compare this constitution to delegation of decision-making, where a spending minister (elected in parliament or appointed by the largest party). Delegation of decision-making tends to yield lower growth, mainly due to the occurrence of production inefficiency.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6143.

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Date of creation: Feb 2007
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Handle: RePEc:cpr:ceprdp:6143

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Related research
Keywords: bargaining endogenous growth overlapping generations taxation voting

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Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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  15. Marsiliani, Laura & Renström, Thomas I, 2004. "Political Institutions, Environmental Policy and Growth," CEPR Discussion Papers 4670, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  16. Jeffrey Banks & John Duggan, 2001. "A Multidimensional Model of Repeated Elections," Wallis Working Papers WP24, University of Rochester - Wallis Institute of Political Economy.
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(explanations, 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.)

  1. Gylfason, Thorvaldur / Hochreiter, Eduard, 2007. "Growing Apart? A Tale of Two Republics: Estonia and Georgia," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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