Political Uncertainty, Public Expenditure and Growth

Julia Darby, Chol-Won Li and Vito Muscatelli
Authors registered in the RePEc Author Service: 春山 鉄源

No 310, CESifo Working Paper Series from CESifo

Abstract: We focus on the link between political instability due to uncertain electoral outcomes and economic growth, through the impact on a government's decisions on how to allocate government expenditure between public consumption and investment. Using an endogenous growth model with partisan electoral effects, we demonstrate that political uncertainty will generate a steady-state equilibrium growth rate which is inefficient and too low. We also use a newly-constructed political data set to estimate panel regressions for several OECD economies over a period 1960-95. Our empirical evidence on the effects of political variables on tax and spending decisions supports our theoretical results.

Keywords: Endogenous growth; public consumption and investment; political uncertainty; panel regressions; OECD countries (search for similar items in EconPapers)
Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Political uncertainty, public expenditure and growth (2004)
Working Paper: Political Uncertainty, Public Expenditure and Growth
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_310

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