Public Investment Under Autocracy and Social Unrest

24 Pages Posted: 11 Feb 2019

See all articles by Johnson Gwatipedza

Johnson Gwatipedza

University of Wyoming - College of Business - Department of Economics and Finance

Thorsten Janus

University of Wyoming

Date Written: March 2019

Abstract

This paper studies the determinants of public investment under autocracy. The optimal investment level balances rent extraction with increasing the future tax base and preventing social unrest. The citizens balance their time between producing and protesting. The labor supply is downward distorted. The public investment level suffers three downward distortions and a fourth, potentially upward distortion. The joint distortions can generate moderate to large efficiency losses. Empirically we show that government spending in autocracies varies more and is less related to tax collections than in democracies. Additionally, it responds to democratization pressure.

Keywords: autocracy, political instability, public investment, social unrest

Suggested Citation

Gwatipedza, Johnson and Janus, Thorsten, Public Investment Under Autocracy and Social Unrest (March 2019). Economics & Politics, Vol. 31, Issue 1, pp. 112-135, 2019, Available at SSRN: https://ssrn.com/abstract=3331968 or http://dx.doi.org/10.1111/ecpo.12123

Johnson Gwatipedza (Contact Author)

University of Wyoming - College of Business - Department of Economics and Finance ( email )

P.O. Box 3985
Laramie, WY 82071-3985
United States

Thorsten Janus

University of Wyoming ( email )

Box 3434 University Station
Laramie, WY 82070
United States

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