Working Paper: CEPR ID: DP2300
Authors: Constantin Sonin
Abstract: For economies in transition, the issues of property rights protection provided by the state and implications for economic performance are very important. The paper develops an endogenous growth theory model with incomplete capital markets and the level of public protection of property rights determined by voting (possibly different from the majority voting) and verifies the implications using cross-section data on Russian regions. During transition (since 1992), Russian regions demonstrated enormous differences in growth rates. It is found that these differences may be explained by initial conditions and effectiveness of institutions. Also, positive impact of inequality on the level of public protection of property rights is found and a theoretical explanation for this phenomenon in the framework of the model is provided.
Keywords: transition economics; property rights; political economy; economic growth
JEL Codes: D72; H40; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Public protection of property rights (P14) | Economic growth (O00) |
| Inequality (D63) | Public protection of property rights (P14) |
| Inequality (D63) | Economic growth (O49) |
| Inequality (D63) | Demand for public protection of property rights (P14) |
| Initial conditions and institutional effectiveness (O17) | Economic growth (O00) |