American Economic Review: Vol. 89 No. 1 (March 1999)


Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter


AER - All Issues

AER Forthcoming Articles

The Voracity Effect

Article Citation

Tornell, Aaron, and Philip R. Lane. 1999. "The Voracity Effect." American Economic Review, 89(1): 22-46.

DOI: 10.1257/aer.89.1.22


The authors analyze an economy that lacks a strong legal-political institutional infrastructure and is populated by multiple powerful groups. Powerful groups dynamically interact via a fiscal process that effectively allows open access to the aggregate capital stock. In equilibrium, this leads to slow economic growth and a 'voracity effect,' by which a shock, such as a terms of trade windfall, perversely generates a more-than-proportionate increase in fiscal redistribution and reduces growth. The authors also show that a dilution in the concentration of power leads to faster growth and a less procyclical response to shocks.

Article Full-Text Access

Full-text Article


Tornell, Aaron (Harvard U and NBER)
Lane, Philip R. (Trinity College, Dublin and CEPR)

JEL Classifications

O17: Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
F43: Economic Growth of Open Economies
O41: One, Two, and Multisector Growth Models

American Economic Review

Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)


AER - All Issues

AER - Forthcoming Articles

Virtual Field Journals

AEA Member Login:

AEAweb | AEA Journals | Contact Us