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

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  • Caporale, Tony
  • Leirer, Jonathan

Abstract

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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  • Caporale, Tony & Leirer, Jonathan, 2010. "Take the money and run: Political turnover, rent-seeking and economic growth," Journal of Economic Behavior & Organization, Elsevier, vol. 76(2), pages 406-412, November.
    • Handle: RePEc:eee:jeborg:v:76:y:2010:i:2:p:406-412
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    Cited by:

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    2. Hadj Fraj, Salma & bouchoucha, Najeh & Maktouf, Samir, 2020. "Political stability and economic growth: the role of exchange rate regime," MPRA Paper 104586, University Library of Munich, Germany.
    3. Theresa Hager, 2020. "Special Interest Groups and Growth: A Meta-Analysis of Mancur Olsons Theory," ICAE Working Papers 116, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
    4. Ismail M. Cole, 2015. "Interest group activity and economic growth: some new evidence from the US states," Applied Economics Letters, Taylor & Francis Journals, vol. 22(10), pages 825-829, July.
    5. Deng, Yuping & Wu, Yanrui & Xu, Helian, 2019. "Political turnover and firm pollution discharges: An empirical study," China Economic Review, Elsevier, vol. 58(C).
    6. Dong, Zhiqiang & Wang, Xiaobing & Zhang, Tianhua & Zhong, Yuejun, 2022. "The effects of local government leadership turnover on entrepreneurial behavior," China Economic Review, Elsevier, vol. 71(C).
    7. Uddin, Md Akther & Ali, Md Hakim & Masih, Mansur, 2017. "Political stability and growth: An application of dynamic GMM and quantile regression," Economic Modelling, Elsevier, vol. 64(C), pages 610-625.
    8. Emery Thomas J. & Kovac Mitja & Spruk Rok, 2023. "Estimating the Effects of Political Instability in Nascent Democracies," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 243(6), pages 599-642, December.
    9. Liu, Guanchun & Zhang, Chengsi & Zhu, Yueteng, 2020. "The interest group theory of banking sector expansion in China: Evidence from a quasi-natural experiment," Journal of International Money and Finance, Elsevier, vol. 107(C).
    10. Jan Fałkowski & Grażyna Bukowska, 2016. "Monopolizacja władzy a wyniki gospodarcze na poziomie Polski lokalnej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 2, pages 91-120.
    11. Cole, Ismail M., 2014. "Short- and long-term growth effects of special interest groups in the U.S. states: A dynamic panel error-correction approach," MPRA Paper 54455, University Library of Munich, Germany, revised 02 Mar 2014.
    12. Francisco Antonio Sousa De Araujo & Paulo De Melo Jorge Neto, 2016. "Competição Política, Grupos De Interesse E A Oferta De Serviços Públicos: Uma Análise Para Os Municípios Cearenses Nos Anos De 2005 E 2009," Anais do XLII Encontro Nacional de Economia [Proceedings of the 42nd Brazilian Economics Meeting] 064, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    13. Ji, Xiaoqing & Liu, Shuai & Lang, Jingyi, 2022. "Assessing the impact of officials' turnover on urban economic efficiency: From the perspective of political promotion incentive and power rent-seeking incentive," Socio-Economic Planning Sciences, Elsevier, vol. 82(PB).
    14. Uddin, Md Akther & Masih, Mansur, 2016. "War and peace: why is political stability pivotal for economic growth of OIC countries?," MPRA Paper 71678, University Library of Munich, Germany.
    15. Andrea De Meo & Lorenzo Ferrari, 2018. "Political Turnover and the Performance of Local Public Enterprises," CEIS Research Paper 438, Tor Vergata University, CEIS, revised 08 Aug 2018.

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