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Property rights, optimal public enforcement, and growth

Author

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  • Andreas Irmen

    (University of Luxembourg and CESifo, Munich)

  • Johanna Kuehnel

    (University of Heidelberg)

Abstract

We study the link between public enforcement of property rights, innovation investments, and economic growth in an endogenous growth framework with an expanding set of product varieties. We find that a government may assure positive equilibrium growth through public employment in the enforcement of property rights, if the economic environment is sufficiently favorable to growth and/or public enforcement is sufficiently effective. However, in terms of welfare an equilibrium path without property rights protection and growth might be preferable. In this case the enforcement of property rights involves too much reallocation of labor from production and research towards the public sector.

Suggested Citation

  • Andreas Irmen & Johanna Kuehnel, 2011. "Property rights, optimal public enforcement, and growth," DEM Discussion Paper Series 11-18, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:11-18
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    More about this item

    Keywords

    Technological Change; Economic Development; Property Rights; Public Employment;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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