The politics of growth: Can lobbying raise growth and welfare?

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Abstract

We consider a setup where lobbyist firms undertake contributions to an office-motivated policy maker in exchange for profit increasing regulations, in a general equilibrium model of R&D-driven growth. We find that, despite increasing concentration-which leads to higher prices and less varieties-lobbying may stimulate growth and increase welfare by means of an expansion in aggregate demand if its real costs are small. This conclusion is supported by a simple calibration exercise.

Original languageEnglish
Pages (from-to)263-280
Number of pages18
JournalJournal Of Macroeconomics
Volume42
DOIs
Publication statusPublished - 1 Dec 2014

Keywords

  • Growth
  • Lobbying
  • Market structure
  • R&D investment
  • Welfare

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