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Property Rights, Public Enforcement, and Growth†
Version of Record online: 6 MAR 2014
© The editors of The Scandinavian Journal of Economics 2014.
The Scandinavian Journal of Economics
Volume 116, Issue 3, pages 797–819, July 2014
How to Cite
Irmen, A. and Kuehnel, J. (2014), Property Rights, Public Enforcement, and Growth. The Scandinavian Journal of Economics, 116: 797–819. doi: 10.1111/sjoe.12058
The present paper is a revised version of our working paper (Irmen and Kuehnel, 2011). We are grateful to an anonymous referee for two outstanding reports.
- Issue online: 13 JUN 2014
- Version of Record online: 6 MAR 2014
- Manuscript Accepted: JAN 2013
- Manuscript Received: SEP 2010
- Economic development;
- public employment;
- technological change;
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 can assure positive equilibrium growth through public employment in the enforcement of property rights, if the economic environment is sufficiently favorable to growth and/or if 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.