We examine the impact of political and criminal accountability on economic growth. Governments seek to maximize their own consumption by extracting rents that are costly to growth. When citizens are able to depose politicians through elections, governments are tightly controlled. The rents politicians are able to extract increase in the length of their term. The effect of the threshold of criminal responsibility on the ability of voters to control politicians is non-monotonic. When tenure in power does not depend on economic performance, rent extraction is limited only by the effectiveness of oversight mechanisms but does not depend on time horizons of the rulers. Accumulation constraint binds only rulers who are neither politically nor criminally accountable.
|Original language||English (US)|
|Number of pages||19|
|Journal||International Journal of Economic Theory|
|State||Published - 2010|
- Efficiency wages
ASJC Scopus subject areas
- Economics and Econometrics