Creator: Chang, Roberto Series: Conference on economics and politics Abstract:
This paper examines the determination of the rate of growth in an economy in which two political parties, each representing a different social class, negotiate the magnitude and allocation of taxes. Taxes may increase growth if they finance public services, but reduce growth when used to redistribute income between classes. The different social classes have different preferences about growth and redistribution. The resulting conflict is resolved through the tax negotiations between the political parties. I use the model to obtain empirical predictions and policy lessons about the relationship between economic growth and income inequality. In particular, I show that, although differences in growth rates across countries may be negatively related to income inequality, redistributing wealth does not enhance growth.
Fach: D72 - Analysis of collective decision-making - Models of political processes : Rent-seeking, elections, legislatures, and voting behavior and O41 - One, Two, and Multisector Growth Models
Creator: Barbosa, Antonio S. Pinto., Jovanovic, Boyan, 1951-, and Spiegel, Mark. Series: Conference on economics and politics Abstract:
This paper analyzes how political stability depends on economic factors. Fluctuations in groups' economic capacities and in their abilities to engage in rent-seeking or predatory behavior create periodic incentives for those groups to renege on their social obligations. A constitution remains in force so long as no party wishes to defect to the noncooperative situation, and it is reinstituted as soon as each party finds it to its advantage to revert to cooperation. Partnerships of equals are easier to sustain than are arrangements in which one party is more powerful in some economic or noneconomic trait. In this sense, inequality is bad for social welfare. Surprisingly, perhaps, it is the rich, and not the poor segments of society who in our model pose the greater threat to the stability of the social order. Using cross-country data, we test and confirm the prediction that most constitutional disruptions should be accompanied by increases in income inequality.
Stichwort: Welfare, Social problems, Interest groups, and Economic models Fach: E52 - Monetary policy, central banking, and the supply of money and credit - Monetary policy and D72 - Analysis of collective decision-making - Models of political processes : Rent-seeking, elections, legislatures, and voting behavior
Creator: Kahn, James A. (James Allan) and Lim, Jong-Soo Series: Conference on economics and politics Abstract:
This paper analyzes the political economy of growth as an issue of intergenerational distribution. The first part of the paper develops a model of endogenous growth via human capital accumulation in an overlapping generations setting. Equilibrium growth is inefficient due to the presence of an intergenerational externality. We characterize the set of Pareto efficient paths for physical and human capital accumulation, and find that there is a continuum of efficient growth rate-interest rate combinations. The preferred combination for an infinitely-lived planner will depend on the social discount rate. Competitive equilibrium with subsidized or mandated human capital accumulation may give rise to a Pareto efficient steady state, though for some parameters efficiency requires some intergenerational redistribution. We then argue that a social planner or government with an infinite horizon is incongruous in an OG model when the agents all have finite horizons. Hence the second part of the paper addresses the question of how a government whose decisionmakers reflect the finite horizons of their constituents would choose policies that affect physical and human capital accumulation. Specifically we assume that each government maximizes a weighted sum of utilities of those currently alive. Each period the government selects a policy that takes into account the effect (through state variables) on subsequent policy decisions (and hence on the welfare of the current young generation). Numerical methods involving polynomial approximations are used to compute equilibria under specific parametric assumptions. Equilibrium growth rates turn out to be substantially below efficient rates.
Stichwort: Education, Growth, Political economy, Political instability, and Markov equilibrium Fach: D72 - Analysis of collective decision-making - Models of political processes : Rent-seeking, elections, legislatures, and voting behavior, O41 - One, Two, and Multisector Growth Models, and D91 - Intertemporal choice and growth - Intertemporal consumer choice ; Life cycle models and saving
Creator: Austen-Smith, David. Series: Conference on economics and politics Abstract:
This paper explores the extent and character of interest group influence on legislative policy in a model of decision making under incomplete information. A committee may propose an alternative to a given status quo under closed rule. Policies are related to consequences with ex ante uncertainty. An interest group is able to acquire policy—relevant information at a price, and has access to legislators at both the agenda setting stage and the vote stage. Lobbying is modeled as a game of strategic information transmission. The price of information is itself a private datum to the group, and legislators cannot observe whether the group elects to become informed. If the group is informed, then its information is likewise private. Among the results are: that not all informed lobbyists choose to try and influence the agenda directly; that there can coexist influential lobbying at both stages of the process; and that while informative agenda stage lobbying is genetically influential, the same is not true of voting stage lobbying.
Fach: D72 - Analysis of collective decision-making - Models of political processes : Rent-seeking, elections, legislatures, and voting behavior and D83 - Information, knowledge, and uncertainty - Search ; Learning ; Information and knowledge ; Communication ; Belief