Voracity and Growth

39 Pages Posted: 11 Jun 2000 Last revised: 8 Apr 2008

See all articles by Aaron Tornell

Aaron Tornell

University of California, Los Angeles (UCLA) - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Philip R. Lane

Trinity College (Dublin) - Department of Economics; Centre for Economic Policy Research (CEPR); Central Bank of Ireland

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Date Written: April 1998

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.

Suggested Citation

Tornell, Aaron and Lane, Philip R., Voracity and Growth (April 1998). NBER Working Paper No. w6498. Available at SSRN: https://ssrn.com/abstract=226242

Aaron Tornell (Contact Author)

University of California, Los Angeles (UCLA) - Department of Economics ( email )

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Philip R. Lane

Trinity College (Dublin) - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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