Public Goods, Voting, and Growth

We study a parametric politico-economic model of economic growth with productive public goods and public consumption goods. The provision of public goods is funded by a proportional tax on consumers' income. Agents are heterogeneous in their initial capital endowments, discount factors and the relative weights of public consumption in overall private utility. They vote on the shares of public goods in GDP. We propose a definition of voting equilibrium, prove the existence and provide a characterization of voting equilibria, and obtain a closed-form solution for the voting outcomes.