eprintid: 768
rev_number: 13
eprint_status: archive
userid: 11
dir: disk0/00/00/07/68
datestamp: 2011-08-08 13:04:26
lastmod: 2011-09-27 13:12:23
status_changed: 2011-08-08 13:04:26
type: article
metadata_visibility: show
item_issues_count: 0
creators_name: Acemoglu, Daron
creators_name: Ticchi, Davide
creators_name: Vindigni, Andrea
creators_id: 
creators_id: davide.ticchi@imtlucca.it
creators_id: andrea.vindigni@imtlucca.it
title: Emergence and persistence of inefficient states
ispublished: pub
subjects: HB
subjects: HN
divisions: EIC
full_text_status: public
abstract: We present a theory of the emergence and persistence of inefficient states based on patronage politics. The society consists of rich and poor. The rich are initially in power, but expect to transition to democracy, which will choose redistributive policies. Taxation requires the employment of bureaucrats. By choosing an inefficient state structure, the rich may be able to use patronage and capture democratic politics, so reducing the amount of redistribution in democracy. Moreover, the inefficient state creates its own constituency and tends to persist over time. Intuitively, an inefficient state structure creates more rents for bureaucrats than would an efficient one. When the poor come to power in democracy, they will reform the structure of the state to make it more efficient so that higher taxes can be collected at lower cost and with lower rents for bureaucrats. Anticipating this, when the society starts out with an inefficient organization of the state, bureaucrats support the rich, who set lower taxes but also provide rents to bureaucrats. We obtain that the rich–bureaucrats coalition may also expand the size of bureaucracy excessively so as to generate enough political support. The model shows that an equilibrium with an inefficient state is more likely to arise when there is greater income inequality, when bureaucratic rents take intermediate values, and when individuals are sufficiently forward-looking
date: 2011-04
date_type: published
publication: Journal of the European Economic Association
volume: 9
number: 2
publisher: MIT Press
pagerange: 177-208
id_number: 10.1111/j.1542-4774.2010.01008.x
refereed: TRUE
issn: 1542-4766
official_url: http://dx.doi.org/10.1111/j.1542-4774.2010.01008.x
citation:   Acemoglu, Daron and Ticchi, Davide and Vindigni, Andrea  Emergence and persistence of inefficient states.  Journal of the European Economic Association, 9 (2).  pp. 177-208.  ISSN 1542-4766      (2011)  
document_url: http://eprints.imtlucca.it/768/1/Ticchi_2011.pdf