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Political Economy of Endogenous Growth (Revised)

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  • Mohtadi, Hamid
  • Roe, Terry L.

Abstract

Using an endogenous growth framework, this paper analyzes the impact of lobbying for public goods on the long run steady-state growth rate of the economy. A socially optimal level of lobbying can be found to exist in the absence of a social planner. Atomistic households, however, exceed this level by viewing taxes as fixed, ignoring the aggregate tax impact of lobbying via increased public expenditures. Two extensions are presented. In one, anti-tax lobbying is analyzed, drawing parallel results. In another, a quasi-public good is introduced, lobbying for which is based not on altruism, but on private gains, though public gains occur as a side effect.

Suggested Citation

  • Mohtadi, Hamid & Roe, Terry L., 1991. "Political Economy of Endogenous Growth (Revised)," Bulletins 7502, University of Minnesota, Economic Development Center.
  • Handle: RePEc:ags:umedbu:7502
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    File URL: http://purl.umn.edu/7502
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    References listed on IDEAS

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    1. In-Koo Cho & David M. Kreps, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, Oxford University Press, vol. 102(2), pages 179-221.
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    3. Banks, Jeffrey S & Sobel, Joel, 1987. "Equilibrium Selection in Signaling Games," Econometrica, Econometric Society, pages 647-661.
    4. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
    5. Georg Noldeke & Eric van Damme, 1990. "Signalling in a Dynamic Labour Market," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 1-23.
    6. Fields, Gary S., 1974. "The allocation of resources to education in less developed countries," Journal of Public Economics, Elsevier, vol. 3(2), pages 133-143, May.
    7. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    8. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-125, March.
    9. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
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    Cited by:

    1. Mohtadi, Hamid & Roe, Terry L., 1997. "Democracy, rent seeking, and growth: Is there a U curve?," Bulletins 7485, University of Minnesota, Economic Development Center.
    2. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 465-490.
    3. Gopinath, Munisamy & Roe, Terry L., 1996. "R&D Spillovers: Evidence from U.S. Food Processing, Farm Machinery and Agriculture," Bulletins 7504, University of Minnesota, Economic Development Center.
    4. Roe, Terry L., 1992. "Political Economy of Structural Adjustment: A General Equilibirum- Interest Group Perspective," Bulletins 7467, University of Minnesota, Economic Development Center.

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    Keywords

    Political Economy;

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