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Take the money and run: Political turnover, rent-seeking and economic growth

  • Caporale, Tony
  • Leirer, Jonathan

We find a negative and significant relationship between gubernatorial turnover and U.S. state economic growth. Although our finding of an inverse relationship between growth and political instability may seem to contradict Olson's (1982a) famous hypothesis regarding the growth retarding nature of political stability, such constitutional political changes were not primarily what Olson had in mind. We argue that enhanced political turnover is associated with more rent-seeking since payoffs to focusing on special interest (redistributive) policies vs. general (growth enhancing) ones are greater for less durable regimes. Therefore, we interpret our evidence as supportive of Olson's broader argument concerning the negative affect of rent-seeking behavior on growth.

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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 76 (2010)
Issue (Month): 2 (November)
Pages: 406-412

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Handle: RePEc:eee:jeborg:v:76:y:2010:i:2:p:406-412
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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  1. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-32, December.
  2. Barro, Robert J, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 407-43, May.
  3. Alesina, Alberto, et al, 1996. " Political Instability and Economic Growth," Journal of Economic Growth, Springer, vol. 1(2), pages 189-211, June.
  4. Barry T. Hirsch & David A. Macpherson, 2003. "Union Membership and Coverage Database from the Current Population Survey: Note," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(2), pages 349-354, January.
  5. Olson, Mancur, 1982. "Stagflation and the Political Economy of the Decline in Productivity," American Economic Review, American Economic Association, vol. 72(2), pages 143-48, May.
  6. Alesina, Alberto & Tabellini, Guido, 1990. "A Positive Theory of Fiscal Deficits and Government Debt," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 403-14, July.
  7. Roubini, Nouriel & Swagel, Phillip & Ozler, Sule & Alesina, Alberto, 1996. "Political Instability and Economic Growth," Scholarly Articles 4553024, Harvard University Department of Economics.
  8. Mueller, Dennis C, 1982. "Redistribution, Growth, and Political Stability," American Economic Review, American Economic Association, vol. 72(2), pages 155-59, May.
  9. Barro, Robert J, 1996. " Democracy and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 1-27, March.
  10. Quiggin, John, 1992. "Testing the Implications of the Olson Hypothesis," Economica, London School of Economics and Political Science, vol. 59(235), pages 261-77, August.
  11. Poitras, Marc & Sutter, Daniel, 2000. " Enhancing Efficiency or Crying Over Spilled Milk: The Benefits of Reform," Public Choice, Springer, vol. 105(1-2), pages 23-40, October.
  12. Baqir, Reza & Easterly, William & Alesina, Alberto, 1999. "Public Goods and Ethnic Divisions," Scholarly Articles 4551797, Harvard University Department of Economics.
  13. Glaeser, E.L. & Scheinkman, J.A., 1993. "Economic Growth in a Cross-Section of Cities," Harvard Institute of Economic Research Working Papers 1645, Harvard - Institute of Economic Research.
  14. Randall G. Holcombe & Donald J. Lacombe, 2004. "The Effect of State Income Taxation on Per Capita Income Growth," Public Finance Review, , vol. 32(3), pages 292-312, May.
  15. J. Barkley Rosser Jr, 2007. "The Rise and Decline of Mancur Olson's View of The Rise and Decline of Nations," Southern Economic Journal, Southern Economic Association, vol. 74(1), pages 4-17, July.
  16. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
  17. Olson, Mancur, 1984. "Beyond Keynesianism and Monetarism," Economic Inquiry, Western Economic Association International, vol. 22(3), pages 297-322, July.
  18. Wallis, John Joseph & Oates, Wallace E, 1988. "Does Economic Sclerosis Set in with Age? An Empirical Study of the Olson Hypothesis," Kyklos, Wiley Blackwell, vol. 41(3), pages 397-417.
  19. Levine, Ross & Renelt, David, 1991. "A sensitivity analysis of cross-country growth regressions," Policy Research Working Paper Series 609, The World Bank.
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