Monday, 7 August 2017

I have a beef with the claims this paper makes regarding economic rent

"[...]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.[...]For the euro area as a whole, our model suggests that some 18% of collected tax revenues are extracted as rents, which corresponds to public spending and tax privileges equal to 7% of output produced. If we assume complete rent dissipation, these values are also social costs of rent seeking.3 At the individual country level, Ireland and the Netherlands exhibit essentially zero rent extraction and rent seeking, followed by Finland. Greece, Portugal and Italy exhibit the highest rent extraction and rent seeking, followed by post-reunification Germany."

No way rent seeking in Ireland and Netherlands was/is zero or near zero. Less rent seeking compared to the other euro countries, yes. But not zero or near zero.

Rent seeking / Economic rent = rent from natural monopolies, finance & insurance, patents, and the grey economy of political favors.

1 comment:

  1. I rest my case: Cost of living comparison between Ireland and the USA