Voracity and Growth
We analyze an economy that lacks a strong legal-political institutional infrastructure and is propulated by multiple powerful groups. Powerful groups dynamically interact via a fiscal process that effectively allows open access to the aggregate capital stock. In equilibrium, this leads to slow economic growth and a "voracity effect," by which a shock, such as a terms of trade windfall, perversely generates a more than proportionate increase in fiscal redistribution and reduces growth. We also show that a dilution in the concentration of power leads to faster growth and a less procyclical response to shocks.
|Date of creation:||1997|
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Web page: http://www.economics.harvard.edu/journals/hier
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- Sachs, J-D & Warner, A-M, 1995.
"Natural Resource Abundance and Economic Growth,"
517a, Harvard - Institute for International Development.
- Easterly, W & Levine, R, 1996.
"Africa's Growth Tragedy : Policies and Ethnic Divisions,"
536, Harvard - Institute for International Development.
- William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
- Jan Gunning & Paul Collier, 1996. "Policy towards Commodity Shocks in Developing Countries," IMF Working Papers 96/84, .
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