This paper analyzes the link between growth and public policy when the latter depends on economically important fundamentals. When policy is endogenous the measured effects of policy on growth will generally be biased. Using a widely quoted theoretical model, the signs of the biases are derived....

We estimate Nash equilibrium consumption externalities in household petrol budget shares. The reaction curves are obtained from an AIDS with petrol consumption externality. Using a continuous set of ten year cross sections from FES (1991-2000), we analyse the externality generated by households...