Criticisms of endogenous growth models with flat rate taxes have highlighted two features that are not substantiated by the data. These models generally imply: (1) that economic growth must fall with the share of government expenditures in output across countries, and (2) that one-time shifts in...

This paper explores the links among growth, the informal economy, and rent-seeking bureaucracies. The presence of congestion associated with the enforcement of property rights implies that informality can be useful. Whether bureaucratic rent-seeking is detrimental to growth then depends on how...

Following recent cross-country empirical work, research on public policy and growth has come to examine the impact of inefficient or corrupt bureaucracies. Most of this work has emphasized the interactions of bureaucracies with private markets. By contrast, this paper focuses on the relationship...