Voracity and Growth / Aaron Tornell, Philip R. Lane.

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Tornell, Aaron

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w6498.Publication details: Cambridge, Mass. National Bureau of Economic Research 1998.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: We analyze an economy that lacks a strong legal-political institutional infrastructure an dis populated by multiple powerful groups. Powerful groups dynamically interact via fiscal process that effectively allows open access to the aggregate capital stock. In equilibrium, this leads to slow economic growth and a voracity effect,' by which a shock, such as a terms of trade windfall, perversely generates a more than proportionate increase in fiscal redistribution and reduces growth. We also show that a dilution in the concentration of power leads to faster growth and a less procyclical response to shocks.

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Previous	nber w6495 The Current Account and the Real Exchange Rate: A Structural VAR Analysis of Major Currencies /	nber w6496 Mentoring and Diversity /	nber w6497 Reform from Within /	nber w6498 Voracity and Growth /	nber w6499 Producers and Predators /	nber w6500 It'll Only Hurt a Second? Microeconomic Determinants of Who Gets Flu Shots /	nber w6501 Labor-Market Frictions and Employment Fluctuations /	Next

April 1998.

We analyze an economy that lacks a strong legal-political institutional infrastructure an dis populated by multiple powerful groups. Powerful groups dynamically interact via fiscal process that effectively allows open access to the aggregate capital stock. In equilibrium, this leads to slow economic growth and a voracity effect,' by which a shock, such as a terms of trade windfall, perversely generates a more than proportionate increase in fiscal redistribution and reduces growth. We also show that a dilution in the concentration of power leads to faster growth and a less procyclical response to shocks.