Political competition, fiscal policy, and economic performance in techno-creative places

Batabyal, Amitrajeet and Kourtit, Karima and Nijkamp, Peter (2024): Political competition, fiscal policy, and economic performance in techno-creative places.

Abstract

This paper introduces a model of political competition under distinct institutional regimes to trace the economic performance of what we call “techno-creative places.” Specifically, we analyze how political competition in high-tech places that are creative in the sense of Richard Florida affects fiscal (tax) policy and consequent economic outcomes. There are three stylized groups of actors in our analysis: laborers or workers, techno-creative class members or entrepreneurs, and the elites who make the political decisions. We study two broad institutional-economic scenarios. In the first (second) scenario, the likelihood of political power shifting permanently from the elites to entrepreneurs is an increasing (decreasing) function of the net income of a representative techno-creative entrepreneur. Our study addresses the institutional implications of both scenarios and then comments on the implications of these two scenarios for the welfare of the elites and the techno-creative entrepreneurs.

• Item Type: MPRA Paper
• Language: English
• Keywords: Techno-Creative Class, Elite, Entrepreneur, Political Competition, Tax Policy
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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