Democracy, government spending, and economic growth: A political-economic explanation of the Barro-effect

摘要: The paper develops a political economicargument for the recently observed inverseu-shaped relation between level ofdemocracy and economic performance. A modelis constructed that shows why howpolitical participation influences thespending behavior of opportunisticgovernments can choose an optimalcombination rents public goods toattract support. If remains comparably low,governments rationally as aninstrument to assure support.With increasing democratic participation,however, become increasinglyexpensive instrument while provision ofpublic becomes more moreefficient in ensuring incumbentgovernment's survival power. As consequence, increase democracy tends toraise growth rates per capita income.However, beneficial impact democracyon holds true only moderatedegrees participation. –in semi-democratic countries – politicalparticipation increases further,governments have incentive toover-invest publicgoods. This model allows derive testthree hypothesis: Firstly, based on asimple endogenous model, weempirically substantiate our hypothesis ofa non-linear, inverse u-shaped relationbetween growthof income. Secondly, we showthat government spending oneconomic is higher moredemocratic countries. Thirdly, wedemonstrate andgovernment share GDP are correlated au-shaped manner.