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.

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Timothy Besley, Torsten Persson and Daniel M. Sturm

October 2010     Paper Number CEPDP1009

Download PDF - Political Competition, Policy and Growth: Theory and Evidence from the United States

This CEP discussion paper is published under the centre's Trade programme.