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Voracity and Growth

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Listed:
  • Aaron Tornell
  • Philip R. Lane

Abstract

We analyze an economy that lacks a strong legal-political institutional infrastructure an dis populated by multiple powerful groups. Powerful groups dynamically interact via 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.

Suggested Citation

  • Aaron Tornell & Philip R. Lane, 1998. "Voracity and Growth," NBER Working Papers 6498, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:6498
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    References listed on IDEAS

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    1. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1203-1250.
    2. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
    3. Ms. Jan Gunning & Mr. Paul Collier, 1996. "Policy towards Commodity Shocks in Developing Countries," IMF Working Papers 1996/084, International Monetary Fund.
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    More about this item

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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