Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/173749
Authors: 
Brezis, Elise S.
Year of Publication: 
2017
Series/Report no.: 
Working Paper 2017-05
Abstract: 
This paper analyzes the conflicts of interest arising from the "revolving door". The revolving door is a common phenomenon, and it is unlikely that most of it can be explained by "regulatory capture", a practice that is unlawful. Therefore, there is a need for a new framework. This paper proposes a framework wherein conflicts of interest arising from the revolving door are not unlawful, as is in the case of regulatory capture, but still lead to economic distortions. The paper introduces a market for bureaucratic capital, which explains why in equilibrium, the government allows this unethical, yet not unlawful, conflict of interest to persist. Our first result is that the political elite finds it optimal to allow the existence of the revolving door, as well as the creation of bureaucratic capital. The second result is that in equilibrium, the revolving door leads to an excessive level of bureaucratic capital. As a consequence, the interconnection of elites and the existence of the revolving door actually lead to lower economic growth.
Subjects: 
elites
bureaucracy
conflicts of interest
bureaucratic capital
revolving door
economic growth
JEL: 
H10
H70
O11
O43
Document Type: 
Working Paper

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