Rent-Seeking Bureaucracies and Oversight in a Simple Growth Model

31 Pages Posted: 21 Nov 2012

Multiple version iconThere are 2 versions of this paper

Date Written: April 1, 1998

Abstract

Following recent cross-country empirical work, research on public policy and growth has come to examine the impact of inefficient or corrupt bureaucracies. Most of this work has emphasized the interactions of bureaucracies with private markets. By contrast, this paper focuses on the relationship between rent-seeking bureaucracies and their political authority. We show that when oversight is relatively costly, as in many developing economies, the political authority exercises little monitoring of its agencies which reduces the effectiveness of productive government spending. Moreover, when the technology used to provide public services is poor, bureaus better succeed in requesting overly large budgets before triggering any monitoring. Both of these characteristics contribute to reducing the growth rate of already poor economies.

JEL Classification: E13, O10

Suggested Citation

Sarte, Pierre-Daniel, Rent-Seeking Bureaucracies and Oversight in a Simple Growth Model (April 1, 1998). FRB Richmond Working Paper No. 98-3 . Available at SSRN: https://ssrn.com/abstract=2123681 or http://dx.doi.org/10.2139/ssrn.2123681

Pierre-Daniel Sarte (Contact Author)

Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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