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Public investment under ethnic diversity and political uncertainty
Bohn, Frank
This paper addresses the puzzle that public services in some developing countries, especially in Africa, are poor despite large public expenditure. The intertemporal model here studies a government’s optimal choice between redistribution and public investment. Ethnic diversity and political uncertainty reinforce one another in producing myopic government behaviour which results in underinvestment. Above some critical value of political instability, it is optimal for the government not to invest at all.
Keyword(s): Political instability; Myopic behaviour; Public finance; Corruption; Political economy; Developing countries; E62; O23; Municipal services--Developing countries; Fiscal policy--Developing countries; Developing countries--Appropriations and expenditures; Political stability--Developing countries
Publication Date:
Type: Working paper
Peer-Reviewed: Unknown
Language(s): English
Institution: University College Dublin
Publisher(s): University College Dublin. School of Economics
File Format(s): other; application/pdf
First Indexed: 2012-08-25 05:22:51 Last Updated: 2018-10-11 15:45:15