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Public Investment under Ethnic Diversity and Political Uncertainty

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  • Frank Bohn

    (University College of Dublin)

Abstract

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.

Suggested Citation

  • Frank Bohn, 2005. "Public Investment under Ethnic Diversity and Political Uncertainty," Working Papers 200501, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:200501
    as

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    File URL: http://www.ucd.ie/economics/research/papers/2005/WP05.01.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    political instability; myopic behaviour; public finance; corruption; political economy; developing countries;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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