This paper develops a game-theoretic model of public policy in a developing country in order to explain a number of empirical regularities. It is shown that under certain circumstances, and increase in government revenue will be completly crowded out by incresed rent dissipation, leaving the provision of public goods unaltered.
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Paper provided by Stockholm - International Economic Studies in its series Papers with number
610.
Length: 31 pages Date of creation: 1996 Date of revision: Handle: RePEc:fth:stocin:610
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Find related papers by JEL classification: C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation O2 - Economic Development, Technological Change, and Growth - - Development Planning and Policy F35 - International Economics - - International Finance - - - Foreign Aid