Abstract

Empirical studies designed to testOlson's (1982) theory of institutional sclerosis aretypically forced to rely upon proxies to measure theability of special interest groups to engage inredistributive activities, which in turn areexpected to hinder economic growth. This note showsthat reliance on proxies biases the estimates towardzero. Here, instrumental variable routines areutilized which increase the estimated impact ofspecial interests on the economy.

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