Efficiency Of Institutions, Political Stability And Income Dynamics
AbstractIn a simple theoretical framework, the quality of institutions affects individual’s investment decisions, and hence income levels and distribution. When institutions deteriorates and inequalities increase, the incumbent undertakes redistributive taxation to maintain political support. The quality of institutions and the extent of redistribution depend on the degree of government responsiveness to citizens and on the credibility of the political opposition to the incumbent. The econometric analysis is based on both single equation models and systems of equations. Good institutions are found to reduce the Gini coefficient and to increase average income, growth, and income of the poor. However, some non-linearites are detected in the institutions-Gini relationship.
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Length: 27 pages
Date of creation: 22 Mar 2005
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Institutions; income distribution; poverty; per-capita income; growth;
Other versions of this item:
- Fabrizio Carmignani, 2007. "Efficiency of Institutions, Political Stability and Income Dynamics," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(1), pages 6-30, February.
- D3 - Microeconomics - - Distribution
- D7 - Microeconomics - - Analysis of Collective Decision-Making
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
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