Political institutions and economic growth

Marsiliani, L.; Renstrom, T.I.

Abstract

We analyze the impact of micro-founded political institutions on economic growth in an overlapping-generations economy, where individuals differ in preferences over a public good (as well as in age). Labour- and capital taxes finance the public good and a public input. The benchmark institution is a parliament, where all decisions are taken. Party entry, parliamentary composition, coalition formation, and bargaining are endogenous. We compare this constitution to delegation of decisionmaking, where a spending minister (elected in parliament or appointed by the largest party). Delegation of decisionmaking tends to yield lower growth, mainly due to the occurrence of production inefficiency.

Citation

Marsiliani, L., & Renstrom, T. (2007). Political institutions and economic growth. Economics of Governance, 8(3), 233-261. https://doi.org/10.1007/s10101-007-0038-z

• Journal Article Type: Article
• Publication Date: May 1, 2007
• Deposit Date: Aug 19, 2008
• Journal: Economics of Governance
• Print ISSN: 1435-6104
• Electronic ISSN: 1435-8131
• Publisher: Springer
• Peer Reviewed: Peer Reviewed
• Volume: 8
• Issue: 3
• Pages: 233-261
• DOI: https://doi.org/10.1007/s10101-007-0038-z
• Keywords: Voting, Bargaining, Taxation, Endogenous growth, Overlapping generations.
• Public URL: https://durham-repository.worktribe.com/output/1564767