Distributional Conflicts, Power and Multiple Growth Paths
AbstractThis paper shows that multiple growth paths may occur in a politico-economic model of endogenous growth. This multiplicity is characterized by the coexistence of a low-tax, low-capital-flight equilibrium and a high-tax, high-capital-flight equilibrium. The likelihood of multiplicity is crucially related to the structure of power in society. For multiplicity to arise, it is necessary that the group in power (or the group that is decisive in determining the political outcome) has greater access to international capital markets than the average in the economy. The model provides an example of an inefficient allocation resulting from majority voting among rational agents.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 633.
Date of creation: Feb 1992
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- Saint-Paul, G. & Verdier, T., 1991. "Distributional Conflicts, Power and Multiple Growth Paths," DELTA Working Papers 91-28, DELTA (Ecole normale supérieure).
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
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- Krusell, Per & Quadrini, Vincenzo & Rios-Rull, Jose-Victor, 1997. "Politico-economic equilibrium and economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 243-272, January.
- Krusell, Per & Quadrini, Vincenzo & Rios-Rull, Jose-Victor, 1996. "Are consumption taxes really better than income taxes?," Journal of Monetary Economics, Elsevier, vol. 37(3), pages 475-503, June.
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