A simple two-sector endogenous growth model of government spending and growth is developed with a producing and a lobbying sector. Lobbyists divert government spending for private gains. One key innovation is this: With democratization, information (and power) becomes more diffused (public),...

Economic policy, policy reform and sustainability are viewed as a political- collective action process. The challenge is to provide incentives for collective action that yield an efficient allocation of a country's resources and to prevent the reemergence of the old policy regime once a crises...

The paper develops a formal model of government's economic decisions as influenced by private agents within the context of neoclassical political economy. The government is assumed to form preferences over interest groups in the economy; in turn these preferences are influenced by the rent...

A two sector general equilibrium model is developed in which households can influence the government's choice of the relative price of traded goods and the level of public goods supplied to each sector. The model is used to illustrate key problems addressed by the political economy literature,...

Governments often establish economic policy in response to political pressure by interest groups. Since these groups' political activities may alter prices, economies so affected cannot be characterized by perfect competition. We develop a model of a "lobbying economy" in which consumers' choice...

Using an endogenous growth framework, this paper analyzes the impact of lobbying for public goods on the long run steady-state growth rate of the economy. A socially optimal level of lobbying can be found to exist in the absence of a social planner. Atomistic households, however, exceed this...

Does democratization imply faster growth, less corruption and less inefficiency? Past studies yield ambiguous results on the effects of democracy on economic performance and growth. We develop a simple two-sector endogenous growth model that shows both very young and mature democracies grow...

Decision based economic theory stresses the central position of the objective function in the behavior of economic agents. Insufficient knowledge of objective functions hampers the development of economic theory. In this article, a methodology for deriving objective functions from conscious...