Work

Voting on the Budget Deficit

Year: 1988

Type: report

Abstract: This paper analyzes a model in which different rational individuals vote over the composition and time profile of public spending.Potential disagreement between current and future majorities generates instability in the social choice function that aggregates individual preferences.In equilibrium a majority of the voters may favor a budget deficit.The size of the deficit under majority rule tends to be larger the greater is the polarization between current and potential future majorities.The paper also shows that the ex-ante efficient equilibrium of this model involves a balanced budget.A balanced budget amendment, however, is not durable under majority rule.

Source: National Bureau of Economic Research

DOI: 10.3386/w2759

Authors: Alberto Alesina, Guido Tabellini

Institutions: Harvard University, University of California, Los Angeles, Harvard University Press

Language: English

Topic: Fiscal Policies and Political Economy

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2979402405

Cites:

Cited by: 544

Related to: 9