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Abstract:

cover
CEP Discussion Paper
Political Competition, Policy and Growth: Theory and Evidence from the United States
Timothy Besley, Torsten Persson and Daniel M. Sturm October 2010
Paper No' CEPDP1009:
Full Paper (pdf)

JEL Classification: D72; H11; H70; N12; O11


Tags: political competition; competition; government; us; economic development

This paper develops a simple model to analyze how a lack of political competition may lead to policies that hinder economic growth. We test the predictions of the model on panel data for the US states. In these data, we find robust evidence that lack of political competition in a state is associated with anti-growth policies: higher taxes, lower capital spending and a reduced likelihood of using right-to-work laws. We also document a strong link between low political competition and low income growth.