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Title:Rent-seeking competition from State coffers : a calibrated DSGE model of the Euro area PDF Logo
Authors:Angelopoulos, Konstantinos
Philippopoulos, Apostolis
Vassilatos, Vanghelis
Issue Date:2006
Series/Report no.:CESifo working papers 1644
Abstract:This paper incorporates an uncoordinated struggle for extra fiscal favors into an otherwise standard Dynamic Stochastic General Equilibrium model. This reflects the popular belief that interest groups compete for privileged transfers and tax treatment at the expense of the general public interest, and so the aggregate economy stagnates. The model is calibrated to the euro area over the period 1980-2003. Our results show that rent-seeking competition can contribute to explaining the European macroeconomic experience. We also get quantitative evidence of the fraction of collected tax revenues grabbed by rent seekers.
Subjects:rent seeking
fiscal policy
real business cycles
JEL:H23
E62
E32
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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