Political Economy of Endogenous Growth (Revised)
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.
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