Political Institutions and Economic Growth

Renström, Thomas I and Laura Marsiliani

No 6143, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 decision-making, where a spending minister (elected in parliament or appointed by the largest party). Delegation of decision-making tends to yield lower growth, mainly due to the occurrence of production inefficiency.

Keywords: Bargaining; Endogenous growth; Overlapping generations; Taxation; Voting (search for similar items in EconPapers)
JEL-codes: D72 D90 H20 H41 O41 (search for similar items in EconPapers)
Date: 2007-02
New Economics Papers: this item is included in nep-dev, nep-dge, nep-pbe, nep-pol and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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