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Bureaucratic Choice and Endogenous Growth

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  • Ingrid Ott

Abstract

This paper analyzes the effects on the growth rate and economic welfare if the social planner engages in selfish behavior. These effects are dis-played in a model of endogenous growth with productive governmental spending. The budget maximizing social planner determines how the public input is to be financed. The integration of selfish behavior by the social planner into a dynamic context combines the endogenous growth theory with the public choice theory. It will be shown that selfish behavior by the planner does not automatically lead to a sub-optimal supply level of the public good with an ensuing welfare loss. Although maximizing his personal utility, the planner may realize an efficient provision. Rather, the consequences of selfish behavior on welfare significantly depend on the formulation of the planner's personal preferences.

Suggested Citation

  • Ingrid Ott, 2001. "Bureaucratic Choice and Endogenous Growth," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(2), pages 225-242, March.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200103)57:2_225:bcaeg_2.0.tx_2-i
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    Cited by:

    1. Ingrid Ott, 2004. "Bureaucratic corruption and macroeconomic performance," Computing in Economics and Finance 2004 303, Society for Computational Economics.
    2. Ott, Ingrid & Soretz, Susanne, 2002. "Optimal Taxation in a Stochastic Endogenous Growth Model with Congestion," Hannover Economic Papers (HEP) dp-253, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.

    More about this item

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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