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The politics of endogenous growth

Authors: Chetan Ghate; Paul J. Zak;

The politics of endogenous growth

Abstract

Is it politically feasible for governments to engineer endogenous growth? This paper illustrates two reasonable political decision mechanisms by which fiscal policy generates endogenous growth with a single accumulable factor, under a constant returns to scale production technology, and without production externalities. In the first mechanism, optimal policies are chosen by the government to maximize constituent support by raising aggregate income. In the second mechanism, optimal policies are determined in a voting equilibrium where agents are concerned only with their own incomes. We demonstrate that policies that target aggregates generate balanced growth and are Pareto optimal. Policies chosen by the median voter also produce balanced growth, but result in public investment 50% below the socially optimal level.

Keywords

Positive Political Economy, ddc:330, Wachstumspolitik, Endogenous Growth, O40, Public Investment, Positive Political Economy, Median Voter Theorem, Endogenous Growth, P16, Finanzpolitik, Median Voter Theorem, Pareto-Optimum, Public Investment, Median Voter, Öffentliche Investition, Neue Wachstumstheorie, E62, Theorie, jel: jel:E62, jel: jel:O40, jel: jel:P16

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
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