Optimal Protection of Property Rights in a General Equilibrium Model of Growth* (original) (raw)

Optimal Growth Policy Under Privately Enforced Property Rights

A model of growth and imperfect property rights is used to examine the impact that government fiscal policy can have in tempering the inefficiencies associated with insecure property. Looking at optimal fiscal policy in this context gives insight into the problems involved with imperfect property rights and points to the limitations that governments must face in dealing with these problems. The main lesson from the analysis is that pro-growth policies may well be undesirable in societies that lack the full rule of law. This is because growth breeds conflict over economic distribution, exacerbating the problem of diversion, and consequently, there are circumstances in which the benefit from faster growth is outweighed by the increased welfare cost of the accompanying diversion. The model features a causal relationship from institutional improvement to investment and growth; but more importantly, it indicates why the desirability of the development of institutions-nation building-may rest, not on the release of constraints on growth, but rather on the creation of a situation in which growth per se becomes desirable.

Property Rights and Growth

2000

We analyse the long-run equilibrium and adjustment dynamics in three popular models of economic growth when property rights are absent. The results are compared to the outcome in the corresponding economy with secure property rights.

Unpleasant Implications of Insecure Property for Optimal Fiscal Policy and Growth

2004

Received wisdom maintains that LDCs ought to pursue pro-growth fiscal policy if it is incentive-feasible. We extend a standard model of growth to include imperfect, endogenously determined, property rights, and re-examine the welfare consequences of fiscal policy. Contrary to conventional wisdom, our analysis indicates that pro-growth fiscal policy might be undesirable in societies that lack the rule of law. The

Why not Africa? -- Growth and Welfare Effects of Secure Property Rights

Public Choice, 2000

The paper presents the long-run equilibrium and development dynamics in the neoclassical growth model and a simple model of endogenous growth when property rights are absent. The results are compared to the outcome in a corresponding model economy with secure property rights. The main findings are that there exists a considerable gain in level and growth of consumption from establishing secure property rights, that economic performance without property rights worsens with increasing number of competing groups, and that the existence, or absence of property rights explains conditional convergence.

Property Rights and Economic Growth

2013

s downloaded 86 50* 19 39 44 Titles forward/ backwards searched 9 7 2 4 0 Full titles downloaded from Scopus 47 43 21 40 39 2.2 Derivation of the evidence base In this section, we discuss the potential impact of the search strategy and evidence quality assessment criteria in deriving the evidence base that underpins the key finding of the Briefing Papers. 2.2.1 Issues raised by the search strategy Although the strategy was designed to do a wide-ranging search and include as many relevant studies as possible, the results of the search process highlighted some potential bias towards particular types of studies and evidence, namely:

Effective property rights, conflict and growth

Journal of Economic Theory, 2007

This paper develops a theory of the interaction between appropriative conflict and economic growth. Appropriative conflict, as measured by the diversion of resources, is viewed as the cost of securing effective property rights. We identify conditions under which conflict rises or falls as the rate of economic growth improves. The main implication of the analysis is that if the quality of property rights is sufficiently poor then faster economic growth stimulates the allocation of resources to appropriative activities and might result in decreased social welfare.

Law, Property Rights and Growth

SSRN Electronic Journal, 2000

This paper investigates how different legal frameworks not only affect the amount of external financing available, but also the allocation of resources among different type of assets. Using a simple model, we show that a firm will get less financing, and thus invest less, in a weak law and order environment. We also show that weaker property rights can lead to an asset substitution effect with firms investing less in intangible assets.

Why Not Africa? - On Growth and Welfare Eects of Secure Property Rights

2002

The paper presents the long-run equilibrium and development dynamics in the neoclassical growth model and a simple model of endogenous growth when property rights are absent. The results are compared to the outcome in a corresponding model economy with secure property rights. The main findings are that there exists a considerable gain in level and growth of con- sumption from

The Relationship between Property Rights and Economic Growth: an Analysis of OECD and EU Countries

DANUBE: Law and Economics Review, 2015

In recent years, institutions and institutional structure have become some of the most popular concepts analyzed by economics theory. New growth theories have especially focused on the effects of institutions and institutional structure on a macro level. Property rights are one of the most important elements of this institutional structure. The relationship between property rights and economic growth have drawn the attention of many researchers and policymakers in recent years. The aim of this study, covering the period 2007–2014, is to examine the relationship between property rights and economic growth with the help of PARDL in OECD and EU countries. According to the result of a bounds test, there is cointegration between the variables. The long- and short-term relationships between series were determined and the results taken from the analysis show that there is a positive effect on economic growth in those countries.

Property Rights and Economic Efficiency

Any economist worth his salt will tell you that property rights are the key to economic growth. The newest work on growth is about institutions and particularly property rights. All of the macroeconomic evidence shows that property rights are required for economic growth. Property rights provide incentives to allocate resources efficiently, giving entrepreneurs an incentive to create new wealth. Without property rights neither of these will occur. Countries with secure property rights grow, while those that lack property rights stagnate.