Public Investment under Ethnic Diversity and Political Uncertainty
AbstractThis paper addresses the puzzle that public services in some developing countries, especially in Africa, are poor despite large public expenditure. The intertemporal model here studies a government’s optimal choice between redistribution and public investment. Ethnic diversity and political uncertainty reinforce one another in producing myopic government behaviour which results in underinvestment. Above some critical value of political instability, it is optimal for the government not to invest at all.
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Bibliographic InfoPaper provided by School Of Economics, University College Dublin in its series Working Papers with number 200501.
Length: 21 pages
Date of creation: 19 Jan 2005
Date of revision:
political instability; myopic behaviour; public finance; corruption; political economy; developing countries;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
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