Public Expenditure Distribution, Voting, and Growth

57 Pages Posted: 11 Jul 2014  

Lorenzo Burlon

Bank of Italy

Multiple version iconThere are 2 versions of this paper

Date Written: April 24, 2014

Abstract

In this paper we study why the misallocation of resources across different productive sectors tends to persist over time. To this end we propose a general equilibrium model that delivers two structural relations. On the one hand, the public expenditure distribution influences the future sectoral composition of the economy; on the other, the distribution of vested interests across sectors determines public policy decisions. The model predicts that different initial sectoral compositions entail different future streams of public expenditure and therefore different development paths.

Keywords: public expenditure, sectoral composition, vested interests, economic growth

JEL Classification: O41, O43

Suggested Citation

Burlon, Lorenzo, Public Expenditure Distribution, Voting, and Growth (April 24, 2014). Bank of Italy Temi di Discussione (Working Paper) No. 961. Available at SSRN: https://ssrn.com/abstract=2464514 or http://dx.doi.org/10.2139/ssrn.2464514

Lorenzo Burlon (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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