Distributional Conflicts, Power and Multiple Growth Paths

Gilles Saint-Paul and Thierry Verdier

No 633, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper shows that multiple growth paths may occur in a politico-economic model of endogenous growth. This multiplicity is characterized by the coexistence of a low-tax, low-capital-flight equilibrium and a high-tax, high-capital-flight equilibrium. The likelihood of multiplicity is crucially related to the structure of power in society. For multiplicity to arise, it is necessary that the group in power (or the group that is decisive in determining the political outcome) has greater access to international capital markets than the average in the economy. The model provides an example of an inefficient allocation resulting from majority voting among rational agents.

Keywords: Capital Flight; Distributional Conflict; Endogenous Growth; Political Equilibrium (search for similar items in EconPapers)
JEL-codes: E21 E62 H21 H31 (search for similar items in EconPapers)
Date: 1992-02
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Citations: View citations in EconPapers (3)

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Working Paper: Distributional Conflicts, Power and Multiple Growth Paths (1991)
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