AbstractMany policies enhance welfare under certain conditions, but have the potential to generate private rents at other times. This can prompt rent-seeking governments to adopt such policies excessively. If the economy's constituents can easily detect opportunistic policymaking, rent-seeking is constrained by the prospect of loosing political reputation and the removal from power. If, in contrast, information is scarce and the politician's motives are accordingly murky, his discretion depends critically on the ability of different constituents to report instances of abuse. Governments, however, can mitigate scrutiny by way of excessive transfers that benefit prospective political clients. The patterns of inefficiency and redistribution that our model generates match salient stylized facts. In contrast to the standard view that inefficiencies are unavoidable when implementing redistributive policies, we argue that redistribution may be a means to disguise inefficient policies that generate private benefits to politicians.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Notre Dame, Department of Economics in its series Working Papers with number 017.
Length: 48 pages
Date of creation: May 2012
Date of revision: Oct 2012
Reputation; Rent-Seeking; Redistribution; Asymmetric Information; Institutions; Political Economics;
Other versions of this item:
- O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-11 (All new papers)
- NEP-CTA-2012-11-11 (Contract Theory & Applications)
- NEP-POL-2012-11-11 (Positive Political Economics)
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.:
- Persson, Torsten & Tabellini, Guido, 1994.
"Is Inequality Harmful for Growth?,"
American Economic Review,
American Economic Association, vol. 84(3), pages 600-621, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Terence Johnson).
If references are entirely missing, you can add them using this form.