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Political Competition, Policy and Growth: Theory and Evidence from the US

  1. Timothy Besley
  1. London School of Economics and CIFAR
  1. Torsten Persson
  1. IIES, Stockholm University and CIFAR
  1. Daniel M. Sturm
  1. London School of Economics
  • Received November 1, 2008.
  • Accepted January 1, 2010.

Abstract

This paper develops a simple model to analyse how a lack of political competition may lead to policies that hinder economic growth. We test the predictions of the model on panel data for the US states. In these data, we find robust evidence that lack of political competition in a state is associated with anti-growth policies: higher taxes, lower capital spending, and a reduced likelihood of using rightto- work laws. We also document a strong link between low political competition and low income growth.

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  1. Review of Economic Studies 77 (4): 1329-1352. doi: 10.1111/j.1467-937X.2010.00606.x
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