The voracity effect

We analyse an economy that lacks a strong legal-political institutional inf rastructure and is populated by multiple powerful groups. Powerful groups d ynamically interact via a fiscal process that effectively allows open acces s to the aggregate capital stock. In equilibrium, this leads to slow econom ic growth and a ''voracity effect" by which a shock such as a terms of trad e windfall, perversely generates a more-than-proportionate increase in fisc al redistribution and reduces growth We also show that a dilution in the co ncentration of power leads to faster growth and a less procyclical response to shocks.