Debts and deficits with fragmented fiscal policymaking
Year: 2000
Type: article
Abstract: This paper develops a political-economic model of fiscal policy — one in which government resources are a ‘common property’ out of which interest groups can finance expenditures on their preferred items. This setup has striking macroeconomic implications. Transfers are higher than a benevolent planner would choose them to be; fiscal deficits emerge even when there are no reasons for intertemporal smoothing, and in the long run government debt tends to be excessively high; peculiar time profiles for transfers can emerge, with high net transfers early on giving rise to high taxes later on.
Source: Journal of Public Economics
Author: Andrés Velasco
Institutions: National Bureau of Economic Research, New York University
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $4,510
OpenAlex ID: W2015935148