NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Voracity and Growth

Aaron Tornell, Philip R. Lane

NBER Working Paper No. 6498
Issued in April 1998

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.

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Document Object Identifier (DOI): 10.3386/w6498

Published: Published as "Voracity and Growth in Discrete Time", EL, Vol. 62, no. 1(January 1999): 139-145.

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