The social cost of rent seeking in Europe

Angelopoulos, K. , Philippopoulos, A. and Vassilatos, V. (2009) The social cost of rent seeking in Europe. European Journal of Political Economy, 25(3), pp. 280-299. (doi: 10.1016/j.ejpoleco.2009.06.001)

Abstract

Direct measurement of the social cost of rent seeking is impeded by non-observable and non-reported activities. We use a dynamic stochastic general equilibrium model to compute the social cost of rent seeking in Europe. Our estimate is based on competition among interest groups for privileges provided by governments, including income transfers, subsidies, and preferential tax treatment. The model, which is calibrated to the euro area as a whole and also to individual euro member countries for 1980–2003, performs well vis-à-vis the data. We find that significant proportions of GDP are extracted as rents available to be sought by rent seekers.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Philippopoulos, Prof Apostolis and Angelopoulos, Professor Konstantinos
• Authors: Angelopoulos, K., Philippopoulos, A., and Vassilatos, V.
• Subjects: H Social Sciences > HB Economic Theory
• College/School: College of Social Sciences > Adam Smith Business School > Economics
• Journal Name: European Journal of Political Economy
• ISSN: 0176-2680
• Published Online: 08 June 2009