Instability and Economic Growth in Different Social Choice Systems

TOHMÉ, FERNANDO; DABÚS, CARLOS

Salta

Congreso; XLI Reunión Anual de la Asociación Argentina de Economía Política; 2006

Asociación Argentina de Economía Política

In this paper we develop a formal model of the influence of instability over long run economic growth. We introduce the notion of a Social Choice System, which selects a representative agent out of the society. This agent would remain in power unless instability, represented by a shortening of her period in office, sets in. The agents are assumed homogeneous, except for their rates of time preference, and each social choice system chooses a different representative agent. We compare the results at three different social choice systems (dictatorship, majority rule and full-fledged democracy) which can be roughly associated to three real-world political systems of increasing participation in policy-making. The resulting “participation - growth” relation has an U shape. However, if instability is introduced, this shape may change. Instability can be associated with the size of the largest coalition that may be willing to overthrow the ruler. It leads to a shortening of the temporal horizon. The representative agent, taking into account this constraint, reevaluates the optimal consumption program, by increasing the rate of time preference and the consumption at the beginning of the plan. With a positively skewed income distribution, the participation-growth relation can adopt a flat or even an inverted U shape. These results seem compatible with previous empirical findings; in particular, they could explain the inverted U shape of the politics-growth relation found by Barro (1997). would remain in power unless instability, represented by a shortening of her period in office, sets in. The agents are assumed homogeneous, except for their rates of time preference, and each social choice system chooses a different representative agent. We compare the results at three different social choice systems (dictatorship, majority rule and full-fledged democracy) which can be roughly associated to three real-world political systems of increasing participation in policy-making. The resulting “participation - growth” relation has an U shape. However, if instability is introduced, this shape may change. Instability can be associated with the size of the largest coalition that may be willing to overthrow the ruler. It leads to a shortening of the temporal horizon. The representative agent, taking into account this constraint, reevaluates the optimal consumption program, by increasing the rate of time preference and the consumption at the beginning of the plan. With a positively skewed income distribution, the participation-growth relation can adopt a flat or even an inverted U shape. These results seem compatible with previous empirical findings; in particular, they could explain the inverted U shape of the politics-growth relation found by Barro (1997). would remain in power unless instability, represented by a shortening of her period in office, sets in. The agents are assumed homogeneous, except for their rates of time preference, and each social choice system chooses a different representative agent. We compare the results at three different social choice systems (dictatorship, majority rule and full-fledged democracy) which can be roughly associated to three real-world political systems of increasing participation in policy-making. The resulting “participation - growth” relation has an U shape. However, if instability is introduced, this shape may change. Instability can be associated with the size of the largest coalition that may be willing to overthrow the ruler. It leads to a shortening of the temporal horizon. The representative agent, taking into account this constraint, reevaluates the optimal consumption program, by increasing the rate of time preference and the consumption at the beginning of the plan. With a positively skewed income distribution, the participation-growth relation can adopt a flat or even an inverted U shape. These results seem compatible with previous empirical findings; in particular, they could explain the inverted U shape of the politics-growth relation found by Barro (1997). System, which selects a representative agent out of the society. This agent would remain in power unless instability, represented by a shortening of her period in office, sets in. The agents are assumed homogeneous, except for their rates of time preference, and each social choice system chooses a different representative agent. We compare the results at three different social choice systems (dictatorship, majority rule and full-fledged democracy) which can be roughly associated to three real-world political systems of increasing participation in policy-making. The resulting “participation - growth” relation has an U shape. However, if instability is introduced, this shape may change. Instability can be associated with the size of the largest coalition that may be willing to overthrow the ruler. It leads to a shortening of the temporal horizon. The representative agent, taking into account this constraint, reevaluates the optimal consumption program, by increasing the rate of time preference and the consumption at the beginning of the plan. With a positively skewed income distribution, the participation-growth relation can adopt a flat or even an inverted U shape. These results seem compatible with previous empirical findings; in particular, they could explain the inverted U shape of the politics-growth relation found by Barro (1997). would remain in power unless instability, represented by a shortening of her period in office, sets in. The agents are assumed homogeneous, except for their rates of time preference, and each social choice system chooses a different representative agent. We compare the results at three different social choice systems (dictatorship, majority rule and full-fledged democracy) which can be roughly associated to three real-world political systems of increasing participation in policy-making. The resulting “participation - growth” relation has an U shape. However, if instability is introduced, this shape may change. Instability can be associated with the size of the largest coalition that may be willing to overthrow the ruler. It leads to a shortening of the temporal horizon. The representative agent, taking into account this constraint, reevaluates the optimal consumption program, by increasing the rate of time preference and the consumption at the beginning of the plan. With a positively skewed income distribution, the participation-growth relation can adopt a flat or even an inverted U shape. These results seem compatible with previous empirical findings; in particular, they could explain the inverted U shape of the politics-growth relation found by Barro (1997). would remain in power unless instability, represented by a shortening of her period in office, sets in. The agents are assumed homogeneous, except for their rates of time preference, and each social choice system chooses a different representative agent. We compare the results at three different social choice systems (dictatorship, majority rule and full-fledged democracy) which can be roughly associated to three real-world political systems of increasing participation in policy-making. The resulting “participation - growth” relation has an U shape. However, if instability is introduced, this shape may change. Instability can be associated with the size of the largest coalition that may be willing to overthrow the ruler. It leads to a shortening of the temporal horizon. The representative agent, taking into account this constraint, reevaluates the optimal consumption program, by increasing the rate of time preference and the consumption at the beginning of the plan. With a positively skewed income distribution, the participation-growth relation can adopt a flat or even an inverted U shape. These results seem compatible with previous empirical findings; in particular, they could explain the inverted U shape of the politics-growth relation found by Barro (1997). System, which selects a representative agent out of the society. This agent would remain in power unless instability, represented by a shortening of her period in office, sets in. The agents are assumed homogeneous, except for their rates of time preference, and each social choice system chooses a different representative agent. We compare the results at three different social choice systems (dictatorship, majority rule and full-fledged democracy) which can be roughly associated to three real-world political systems of increasing participation in policy-making. The resulting “participation - growth” relation has an U shape. However, if instability is introduced, this shape may change. Instability can be associated with the size of the largest coalition that may be willing to overthrow the ruler. It leads to a shortening of the temporal horizon. The representative agent, taking into account this constraint, reevaluates the optimal consumption program, by increasing the rate of time preference and the consumption at the beginning of the plan. With a positively skewed income distribution, the participation-growth relation can adopt a flat or even an inverted U shape. These results seem compatible with previous empirical findings; in particular, they could explain the inverted U shape of the politics-growth relation found by Barro (1997). would remain in power unless instability, represented by a shortening of her period in office, sets in. The agents are assumed homogeneous, except for their rates of time preference, and each social choice system chooses a different representative agent. We compare the results at three different social choice systems (dictatorship, majority rule and full-fledged democracy) which can be roughly associated to three real-world political systems of increasing participation in policy-making. The resulting “participation - growth” relation has an U shape. However, if instability is introduced, this shape may change. Instability can be associated with the size of the largest coalition that may be willing to overthrow the ruler. It leads to a shortening of the temporal horizon. The representative agent, taking into account this constraint, reevaluates the optimal consumption program, by increasing the rate of time preference and the consumption at the beginning of the plan. With a positively skewed income distribution, the participation-growth relation can adopt a flat or even an inverted U shape. These results seem compatible with previous empirical findings; in particular, they could explain the inverted U shape of the politics-growth relation found by Barro (1997). would remain in power unless instability, represented by a shortening of her period in office, sets in. The agents are assumed homogeneous, except for their rates of time preference, and each social choice system chooses a different representative agent. We compare the results at three different social choice systems (dictatorship, majority rule and full-fledged democracy) which can be roughly associated to three real-world political systems of increasing participation in policy-making. The resulting “participation - growth” relation has an U shape. However, if instability is introduced, this shape may change. Instability can be associated with the size of the largest coalition that may be willing to overthrow the ruler. It leads to a shortening of the temporal horizon. The representative agent, taking into account this constraint, reevaluates the optimal consumption program, by increasing the rate of time preference and the consumption at the beginning of the plan. With a positively skewed income distribution, the participation-growth relation can adopt a flat or even an inverted U shape. These results seem compatible with previous empirical findings; in particular, they could explain the inverted U shape of the politics-growth relation found by Barro (1997). Social Choice System, which selects a representative agent out of the society. This agent would remain in power unless instability, represented by a shortening of her period in office, sets in. The agents are assumed homogeneous, except for their rates of time preference, and each social choice system chooses a different representative agent. We compare the results at three different social choice systems (dictatorship, majority rule and full-fledged democracy) which can be roughly associated to three real-world political systems of increasing participation in policy-making. The resulting “participation - growth” relation has an U shape. However, if instability is introduced, this shape may change. Instability can be associated with the size of the largest coalition that may be willing to overthrow the ruler. It leads to a shortening of the temporal horizon. The representative agent, taking into account this constraint, reevaluates the optimal consumption program, by increasing the rate of time preference and the consumption at the beginning of the plan. With a positively skewed income distribution, the participation-growth relation can adopt a flat or even an inverted U shape. These results seem compatible with previous empirical findings; in particular, they could explain the inverted U shape of the politics-growth relation found by Barro (1997). would remain in power unless instability, represented by a shortening of her period in office, sets in. The agents are assumed homogeneous, except for their rates of time preference, and each social choice system chooses a different representative agent. We compare the results at three different social choice systems (dictatorship, majority rule and full-fledged democracy) which can be roughly associated to three real-world political systems of increasing participation in policy-making. The resulting “participation - growth” relation has an U shape. However, if instability is introduced, this shape may change. Instability can be associated with the size of the largest coalition that may be willing to overthrow the ruler. It leads to a shortening of the temporal horizon. The representative agent, taking into account this constraint, reevaluates the optimal consumption program, by increasing the rate of time preference and the consumption at the beginning of the plan. With a positively skewed income distribution, the participation-growth relation can adopt a flat or even an inverted U shape. These results seem compatible with previous empirical findings; in particular, they could explain the inverted U shape of the politics-growth relation found by Barro (1997). would remain in power unless instability, represented by a shortening of her period in office, sets in. The agents are assumed homogeneous, except for their rates of time preference, and each social choice system chooses a different representative agent. We compare the results at three different social choice systems (dictatorship, majority rule and full-fledged democracy) which can be roughly associated to three real-world political systems of increasing participation in policy-making. The resulting “participation - growth” relation has an U shape. However, if instability is introduced, this shape may change. Instability can be associated with the size of the largest coalition that may be willing to overthrow the ruler. It leads to a shortening of the temporal horizon. The representative agent, taking into account this constraint, reevaluates the optimal consumption program, by increasing the rate of time preference and the consumption at the beginning of the plan. With a positively skewed income distribution, the participation-growth relation can adopt a flat or even an inverted U shape. These results seem compatible with previous empirical findings; in particular, they could explain the inverted U shape of the politics-growth relation found by Barro (1997). , which selects a representative agent out of the society. This agent would remain in power unless instability, represented by a shortening of her period in office, sets in. The agents are assumed homogeneous, except for their rates of time preference, and each social choice system chooses a different representative agent. We compare the results at three different social choice systems (dictatorship, majority rule and full-fledged democracy) which can be roughly associated to three real-world political systems of increasing participation in policy-making. The resulting “participation - growth” relation has an U shape. However, if instability is introduced, this shape may change. Instability can be associated with the size of the largest coalition that may be willing to overthrow the ruler. It leads to a shortening of the temporal horizon. The representative agent, taking into account this constraint, reevaluates the optimal consumption program, by increasing the rate of time preference and the consumption at the beginning of the plan. With a positively skewed income distribution, the participation-growth relation can adopt a flat or even an inverted U shape. These results seem compatible with previous empirical findings; in particular, they could explain the inverted U shape of the politics-growth relation found by Barro (1997). Keywords: optimal growth, social choice systems, instability.: optimal growth, social choice systems, instability.