Public Expenditure Distribution, Voting, and Growth

Lorenzo Burlon
2010 Social Science Research Network  
In this paper we study why the misallocation of resources across different productive sectors tends to persist over time. To this end we propose a general equilibrium model that delivers two structural relations. On the one hand, the public expenditure distribution influences the future sectoral composition of the economy; on the other, the distribution of vested interests across sectors determines public policy decisions. The model predicts that different initial sectoral compositions entail
more » ... mpositions entail different future streams of public expenditure and therefore different development paths. JEL Classification: O41, O43.
doi:10.2139/ssrn.1677394 fatcat:okputcfuvfgxfebzsf54mtmlty