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Distributional Conflicts, Power and Multiple Growth Paths

Author

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  • Saint-Paul, Gilles
  • Verdier, Thierry

Abstract

This paper shows that multiple growth paths may occur in a politico-economic model of endogenous growth. This multiplicity is characterized by the coexistence of a low-tax, low-capital-flight equilibrium and a high-tax, high-capital-flight equilibrium. The likelihood of multiplicity is crucially related to the structure of power in society. For multiplicity to arise, it is necessary that the group in power (or the group that is decisive in determining the political outcome) has greater access to international capital markets than the average in the economy. The model provides an example of an inefficient allocation resulting from majority voting among rational agents.

Suggested Citation

  • Saint-Paul, Gilles & Verdier, Thierry, 1992. "Distributional Conflicts, Power and Multiple Growth Paths," CEPR Discussion Papers 633, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:633
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    Cited by:

    1. Krusell, Per & Quadrini, Vincenzo & Rios-Rull, Jose-Victor, 1997. "Politico-economic equilibrium and economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 243-272, January.
    2. Krusell, Per & Quadrini, Vincenzo & Rios-Rull, Jose-Victor, 1996. "Are consumption taxes really better than income taxes?," Journal of Monetary Economics, Elsevier, vol. 37(3), pages 475-503, June.
    3. Meral (IBRAIM) KAGITCI & Mirela Elena NICHITA & Marcel VULPOI, 2014. "The Impact Of Public Debt On Economic Growth Within Eu," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 4, pages 65-72, July.

    More about this item

    Keywords

    Capital Flight; Distributional Conflict; Endogenous Growth; Political Equilibrium;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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