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Public investment under autocracy and social unrest

Johnson Gwatipedza and Thorsten Janus ()

Economics and Politics, 2019, vol. 31, issue 1, 112-135

Abstract: This paper studies the determinants of public investment under autocracy. The optimal investment level balances rent extraction with increasing the future tax base and preventing social unrest. The citizens balance their time between producing and protesting. The labor supply is downward distorted. The public investment level suffers three downward distortions and a fourth, potentially upward distortion. The joint distortions can generate moderate to large efficiency losses. Empirically we show that government spending in autocracies varies more and is less related to tax collections than in democracies. Additionally, it responds to democratization pressure.

Date: 2019
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https://doi.org/10.1111/ecpo.12123

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