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Durham Research Online
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Political institutions and economic growth.

Marsiliani, L. and Renstrom, T. I. (2007) 'Political institutions and economic growth.', Economics of governance., 8 (3). pp. 233-261.


We analyze the impact of micro-founded political institutions on economic growth in an overlapping-generations economy, where individuals differ in preferences over a public good (as well as in age). Labour- and capital taxes finance the public good and a public input. The benchmark institution is a parliament, where all decisions are taken. Party entry, parliamentary composition, coalition formation, and bargaining are endogenous. We compare this constitution to delegation of decisionmaking, where a spending minister (elected in parliament or appointed by the largest party). Delegation of decisionmaking tends to yield lower growth, mainly due to the occurrence of production inefficiency.

Item Type:Article
Keywords:Voting, Bargaining, Taxation, Endogenous growth, Overlapping generations.
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Date of first online publication:May 2007
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