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Voting on the Budget Deficit

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  • Tabellini, Guido
  • Alesina, Alberto

Abstract

This paper analyzes a model in which a group of rational individuals votes over the composition and time profile of public spending. All voters agree that a balanced budget is ex ante optimal. However, if there is disagreement between current and future majorities, a balanced budget is not a political equilibrium under majority rule. Under certain conditions, a majority of the voters favors a budget deficit, and the equilibrium deficit is larger the greater is the polarization among voters. Copyright 1990 by American Economic Association.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 80 (1990)
Issue (Month): 1 (March)
Pages: 37-49

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Handle: RePEc:aea:aecrev:v:80:y:1990:i:1:p:37-49

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