Presentation is loading. Please wait.

Presentation is loading. Please wait.

Economic Growth David N. Weil Chapter 12: Government Jérôme Carai-Beaufils Joanna Poënset « Little else is requisite to carry a state to the highest degree.

Similar presentations


Presentation on theme: "Economic Growth David N. Weil Chapter 12: Government Jérôme Carai-Beaufils Joanna Poënset « Little else is requisite to carry a state to the highest degree."— Presentation transcript:

1 Economic Growth David N. Weil Chapter 12: Government Jérôme Carai-Beaufils Joanna Poënset « Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things” Adam Smith, 1755

2 Presentation Introduction Defining Government’s Proper Role In The Economy How Government Affects Growth? Why Governments Do Things That Are Bad For Growth? Why Poor Countries Have Bad Governments? Conclusion

3 Introduction How can governments affect economic growth? =>looking to pairs of countries similar except governments. =>looking at its policies changes within a country Normative and Positive Approaches

4 Defining Government’s Proper Role In The Economy (1) The Case For Government Intervention In The Economy => Market Failure Public goods, Externalities, Monopolies and Coordination failures => Income Redistribution

5 Defining Government’s Proper Role In The Economy (2) The Case Against Government Intervention In The Economy  Inefficiency of the Government to resolve Market Failures => Equity-Efficiency Trade-Off

6 Defining Government’s Proper Role In The Economy (3) Swings of the Pendulum  Around the 1 st World War: Active Role of Governments in Economic Development  Last Decades of 20 th Century: Shift Away from Governments Control of the Economy

7 How Government Affects Growth (1)? Normative Approach Rule of Law =>Rule of Law = Public Good “ Rule of Law and Factors Accumulation, 2005 ”

8 How Government Affects Growth(2)? Normative Approach Rule of Law “ Rule of Law and Productivity“

9 How Government Affects Growth(3)? Normative Approach Taxation, Efficiency and the Size of Government “Effect of a Tax”

10 How Government Affects Growth(4)? Normative Approach Taxation, Efficiency and the Size of Government “Growth of Government Spending ”

11 How Government Affects Growth(5)? Normative Approach Planning and other industrial policies  State Enterprises  Marketing Boards  Trade Restrictions

12 Why Governments Do Things That Are Bad For Growth(1)? Positive Approach Some Others Goals:  Population Welfare  Prevent Further Costs in the Future  Income Redistribution

13 Why Governments Do Things That Are Bad For Growth(2)? Positive Approach Corruption and Kleptocracy “Government Corruption versus GDP per Capita, 2005”

14 Why Governments Do Things That Are Bad For Growth(3)? Positive Approach Self Preservation =>Keep the Government in Power Russia in 19 th Century Mobutu in Zaïre =>But lack of growth can also threaten a government’s survival

15 Why Poor Countries Have Bad Governments(1)? Causation running from Income to Government Quality  Bad Government have not always an Impediment to Economic Growth  Quality of Government often Improves in Response to Growing Income

16 Why Poor Countries Have Bad Governments(2)? Causation running from Government Quality to Income =>Bad Government: A Cause rather than an Effect of Economic Underdevelopment =>Governments issued from Colonialism

17 Conclusion Incentives of Government Interventions What should the Government do? =>Normative Approach Why does the Government do what it does? =>Positive Approach A Bond between Poverty and Bad Governments


Download ppt "Economic Growth David N. Weil Chapter 12: Government Jérôme Carai-Beaufils Joanna Poënset « Little else is requisite to carry a state to the highest degree."

Similar presentations


Ads by Google