Policy variability and economic growth
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In this paper, the authors explore the effect of policy variability on economic growth and welfare and find that the lack of persistence in policies per se need not be welfare reducing and that it is likely to decrease growth, but, by creating a stronger intertemporal link across regimes, variability reduces the fluctuation in investment rates, thus decreasing the magnitude of changes in consumption and increasing welfare.Abstract:
This paper explores the effect of policy variability (or frequency of regime switching) on economic growth and welfare. We study a one-sector growth model where investment can be subsidized at either a positive rate or not subsidized at all. We find that the lack of persistence in policies per se need not be welfare reducing and that it is likely to decrease growth. Higher variability implies more frequent changes in consumption and investment. But, by creating a stronger intertemporal link across regimes, variability reduces the fluctuation in investment rates, thus decreasing the magnitude of changes in consumption and increasing welfare.read more
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References
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Distributive Politics and Economic Growth
Alberto Alesina,Dani Rodrik +1 more
TL;DR: This paper analyzed the relationship between economics and politics and concluded that inequality is conducive to the adoption of growth-retarding policies, and presented cross-country evidence consistent with it. But their analysis focused on how an economy's initial configuration of resources shapes the political struggle for income and wealth distribution, and how that, in turn, affects long run growth.
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Long Run Policy Analysis and Long Run Growth
TL;DR: In this paper, the authors describe a class of models in which this type of heterogeneity in growth experiences can arise as a result of cross-country differences in government policy, which can also create incentives for labor migration from slow growing to fast growing countries.
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Long-Run Policy Analysis and Long-Run Growth
TL;DR: In this paper, the authors describe a class of models in which this heterogeneity in growth experiences can be the result of cross-country differences in government policy, which can also create incentives for labor migration from slow-growing to fast-growing countries.
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Openness and Growth: A Time-Series, Cross-Country Analysis for Developing Countries
TL;DR: In this article, the authors compare the association between many popular proxies for openness and the rate of GDP growth, as well as the results from cross-section and panel estimation, controlling for country effects.
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A Convex Model of Equilibrium Growth: Theory and Policy Implications
TL;DR: In this paper, the authors exposit a convex model of equilibrium growth and show that the long-run growth rate in per capita consumption depends on the parameters describing tastes, technology, and policies.
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