Political competition, policy and growth: theory and evidence from the United States
Besley, T.
, Persson, T. & Sturm, D.
(2010).
Political competition, policy and growth: theory and evidence from the United States.
(CEP Discussion Papers CEPDP1009).
London School of Economics and Political Science. Centre for Economic Performance.
, Persson, T. & Sturm, D.
(2010).
Political competition, policy and growth: theory and evidence from the United States.
(CEP Discussion Papers CEPDP1009).
London School of Economics and Political Science. Centre for Economic Performance.
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.