Political capitalism: The interaction between income inequality, economic freedom and democracy

Krieger, Tim; Meierrieks, Daniel

doi:10.1016/j.ejpoleco.2016.10.005

Cited by 51 publications

(19 citation statements)

References 71 publications

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“…Acemoglu, Johnson, and Robinson () and Acemoglu and Robinson () provide convincing explanations for the observation that weak institutional settings in a country often correlate with high levels of inequality (for empirical evidence, see, e.g., Krieger & Meierrieks, 2016b). They argue that the arrangement of economic institutions is determined by the exercise of political power by different societal groups, where groups with more power are more likely to shape economic institutions in their favor.…”

Section: A Review Of the Literature: Theoretical Mechanisms And Empirmentioning

confidence: 93%

Oil booms and inequality in Iran

Farzanegan

Krieger

2018

Review Development Economics

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We study the response of income inequality to positive per capita oil and gas revenue shocks in Iran. Using historical data from 1973 to 2016 and vector autoregression (VAR) as well as vector error correction (VECM) model‐based impulse‐response functions, we find a positive and statistically significant response of income inequality to oil booms. We also explore possible channels through which oil booms may increase inequality, including private sector credit growth, construction investment, international trade (imports) and real economic output. We find that following an oil boom, higher imports, private sector credit growth, and real economic output can explain the increased income gap to a certain degree in Iran's oil‐based economy. Our analysis can help policymakers evaluate and accommodate the possible positive or negative effects of inequality in Iran resulting from the 2016 lifting of the embargo against the country.

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Section: A Review Of the Literature: Theoretical Mechanisms And Empirmentioning

confidence: 93%

Oil booms and inequality in Iran

Farzanegan

Krieger

2018

Review Development Economics

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“…And is this freedom coupled to the income inequality? [28] • (In capitalism) capital also gets rewarded.…”

Section: Discussionmentioning

confidence: 99%

Distribution of Income (Including Minimum Wage); Comparison of Societies as Studied by a Molecular-Dynamics Algorithm and Analytical Techniques

Stallinga

2019

JEMT

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In this research we tried to answer the question: How to optimize the total production of economy. For finding the answer we used two postulates: First, a worker is incentivated to work if it pays off. When in the income ranking the neighbor below earns less and the one above earns more the worker will work harder and produce more. The productivity of the worker is proportional to this ’derivative’ in the income curve. (Note: a worker’s salary is not assumed necessarily proportional to his productivity). The second postulate depends on who is in control of the production process. In highly-simplified naming: In capitalism, the capital takes the decisions, in a democracy the people do, by vote. We also simulated a dictatorial system in which decisions can be imposedby a (benevolent) dictator. We used these ingredients in evolutionary computation. Starting with an arbitrary initial distribution, we make random small changes to it and if the total production increases, a decision will be made whether to implement these changes. This procedure is repeated until the distribution is stable. Remarkably, the outcomes for ’democracy’ and ’capitalism’ are similar. Capitalism and democracy go hand-in-hand together: One person getting all income, two people working, and most not working and not receiving. These results are also analytically found. In ’communism’, nobody works and everybody perishes. In a ’dictatorial’ system we can optimize production for the benefit of the people, and come to the conclusion that the introduction of minimum wages is beneficial, and these should be 50% of the average income.

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“…In a country with institutional flexibility, all rights and legitimate interests of citizens are protected by national law. The majority of ideas or comments of residents are accepted by the administrators or officials (Davis 2010;Kacprzyk 2015;Krieger and Meierrieks 2016), and residents believe in existing policies issued by governments (Farhadi et al 2015;Islam 1996Islam , 2018Shen and Williamson 2016). Unfortunately, this is not observed in the countries with civil war or weak government (Rose-Ackerman 2008).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

Impact of Economic Freedom on Corruption Revisited in ASEAN Countries: A Bayesian Hierarchical Mixed-Effects Analysis

Thạch

Ngọc

2021

Economies

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Conceptual and applied studies assessing the linkage between economic freedom and corruption expect that economic freedom boosts economic growth, improves income, and reduces levels of corruption. However, most of them have concentrated on developed and developing groups, while the Association of Southeast Asian Nations (ASEAN) countries have drawn much less attention. Empirical findings are most often conflicting. Moreover, previous studies performed rather simple frequentist techniques regressing one or some freedom indices on corruption that do not allow for grasping all the aspects of economic freedom as well as capturing variations across countries. The study aims to investigate the effects of ten components of economic freedom index on the level of corruption in ten ASEAN countries from 1999 to 2018. By applying a Bayesian hierarchical mixed-effects regression via a Monte Carlo technique combined with the Gibbs sampler, the obtained results suggest several findings as follows: (i) In view of probability, the predictors property rights, government integrity, tax burden, business freedom, labor freedom, and investment freedom have a strongly positive impact on the response perceived corruption index; (ii) Government spending, trade freedom, and financial freedom exert a strongly negative effect, while the influence of monetary freedom is ambiguous; and (iii) There is an existence of not only random intercepts but also random coefficients at the country level impacting the model outcome. The empirical outcome could be of major importance for more efficient corruption controlling in emerging countries, including ASEAN nations.

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Political capitalism: The interaction between income inequality, economic freedom and democracy

Cited by 51 publications

References 71 publications

Oil booms and inequality in Iran

Oil booms and inequality in Iran

Distribution of Income (Including Minimum Wage); Comparison of Societies as Studied by a Molecular-Dynamics Algorithm and Analytical Techniques

Impact of Economic Freedom on Corruption Revisited in ASEAN Countries: A Bayesian Hierarchical Mixed-Effects Analysis

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