Advanced Search
MyIDEAS: Login to save this article or follow this journal

Modelling the composition of government expenditure in democracies

Contents:

Author Info

  • Creedy, John
  • Moslehi, Solmaz

Abstract

This paper considers majority voting over the ratio of transfer payments to per capita expenditure on public goods. A model is constructed in which individuals vote for government expenditure on a public good, for a given income tax rate. Labour supply is endogenous. The equilibrium ratio of transfers to public good expenditure is a function of the ratio of median to mean wages and the tax rate. Cross-sectional regressions confirmed that reductions in the skewness of the wage rate distribution are associated with reductions in transfer payments relative to public goods expenditure, at a decreasing rate. Increases in the tax rate initially increase the importance of transfer payments but eventually tax rate increases lead to lower transfers.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/B6V97-4T3DCNB-1/2/4de857f80605a7cbd669053ef73501be
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 25 (2009)
Issue (Month): 1 (March)
Pages: 42-55

as in new window
Handle: RePEc:eee:poleco:v:25:y:2009:i:1:p:42-55

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505544

Related research

Keywords: Median voter Public goods Transfer payment;

Other versions of this item:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Rainald Borck, 2007. "Voting, Inequality And Redistribution," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 21(1), pages 90-109, 02.
  2. Cameron A. Shelton, 2007. "The Size and Composition of Government Expenditure," Wesleyan Economics Working Papers, Wesleyan University, Department of Economics 2007-002, Wesleyan University, Department of Economics.
  3. Tyran, Jean-Robert & Sausgruber, Rupert, 2006. "A little fairness may induce a lot of redistribution in democracy," European Economic Review, Elsevier, Elsevier, vol. 50(2), pages 469-485, February.
  4. Tridimas, George & Winer, Stanley L., 2005. "The political economy of government size," European Journal of Political Economy, Elsevier, Elsevier, vol. 21(3), pages 643-666, September.
  5. Volker Grossmann, 2002. "Income Inequality, Voting Over the Size of Public Consumption, and Growth," CESifo Working Paper Series 731, CESifo Group Munich.
  6. Tabellini, Guido & Alesina, Alberto, 1990. "Voting on the Budget Deficit," American Economic Review, American Economic Association, American Economic Association, vol. 80(1), pages 37-49, March.
  7. Mueller,Dennis C., 2003. "Public Choice III," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521894753.
  8. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(5), pages 914-27, October.
  9. Romer, Thomas, 1975. "Individual welfare, majority voting, and the properties of a linear income tax," Journal of Public Economics, Elsevier, Elsevier, vol. 4(2), pages 163-185, February.
  10. Marina Azzimonti & Eva de Francisco & Per Krusell, 2006. "Median-voter Equilibria in the Neoclassical Growth Model under Aggregation," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 108(4), pages 587-606, December.
  11. Hassler, John & Krusell, Per & Storesletten, Kjetil & Zilibotti, Fabrizio, 2005. "The dynamics of government," Journal of Monetary Economics, Elsevier, Elsevier, vol. 52(7), pages 1331-1358, October.
  12. Roberts, Kevin W. S., 1977. "Voting over income tax schedules," Journal of Public Economics, Elsevier, Elsevier, vol. 8(3), pages 329-340, December.
  13. Borge, Lars-Erik & Rattso, J.Jorn, 2004. "Income distribution and tax structure: Empirical test of the Meltzer-Richard hypothesis," European Economic Review, Elsevier, Elsevier, vol. 48(4), pages 805-826, August.
  14. Tuomala, Matti, 1985. " Simplified Formulae for Optimal Linear Income Taxation," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 87(4), pages 668-72.
  15. Hassler, John & Storesletten, Kjetil & Zilibotti, Fabrizio, 2007. "Democratic public good provision," Journal of Economic Theory, Elsevier, Elsevier, vol. 133(1), pages 127-151, March.
  16. Tridimas, George, 2001. " The Economics and Politics of the Structure of Public Expenditure," Public Choice, Springer, Springer, vol. 106(3-4), pages 299-316, March.
  17. Per Krusell & Jose-Victor Rios-Rull, 1997. "On the size of U.S. government: political economy in the neoclassical growth model," Staff Report, Federal Reserve Bank of Minneapolis 234, Federal Reserve Bank of Minneapolis.
  18. Bearse, P. & Glomm, G. & Jeneba, E., 1999. "Composition of Government Budget, Non-Single Peakedness and Majority Voting," Papers, Michigan State - Econometrics and Economic Theory 9903, Michigan State - Econometrics and Economic Theory.
  19. Galasso, Vincenzo, 2003. "Redistribution and fairness: a note," European Journal of Political Economy, Elsevier, Elsevier, vol. 19(4), pages 885-892, November.
  20. Harms, Philipp & Zink, Stefan, 2003. "Limits to redistribution in a democracy: a survey," European Journal of Political Economy, Elsevier, Elsevier, vol. 19(4), pages 651-668, November.
  21. Shelton, Cameron A., 2007. "The size and composition of government expenditure," Journal of Public Economics, Elsevier, Elsevier, vol. 91(11-12), pages 2230-2260, December.
  22. Jo Thori Lind, 2005. "Why is there so little redistribution?," Nordic Journal of Political Economy, Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 31, pages 111-125.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Creedy, John & Li, Shuyun May & Moslehi, Solmaz, 2010. "Inequality Aversion And The Optimal Composition Of Government Expenditure," Macroeconomic Dynamics, Cambridge University Press, Cambridge University Press, vol. 14(S2), pages 290-306, November.
  2. Agnese Sacchi & Simone Salotti, 2012. "A comprehensive anlysis of expenditure decentralization and of the composition of local public spending," Departmental Working Papers of Economics - University 'Roma Tre' 0155, Department of Economics - University Roma Tre.
  3. Creedy, John & Moslehi, Solmaz, 2012. "The Composition of Government Expenditure with Alternative Choice Mechanisms," Working Paper Series 2433, Victoria University of Wellington, Chair in Public Finance.
  4. Momi Dahan & Michel Strawczynski, 2010. "Fiscal Rules and Composition Bias in OECD Countries," CESifo Working Paper Series 3088, CESifo Group Munich.
  5. John Creedy & Solamz Moslehi, 2010. "The optimal composition of government expenditure among transfers, education and public goods," Hacienda Pública Española, IEF, IEF, vol. 194(3), pages 41-64, June.
  6. John Creedy & Shuyun May Li & Solmaz Moslehi, 2008. "The Composition of Government Expenditure in an Overlapping Generations Model," Department of Economics - Working Papers Series, The University of Melbourne 1043, The University of Melbourne.
  7. Tetsuo Ono, 2013. "Inequality Dynamics and the Politics of Redistribution," Discussion Papers in Economics and Business, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) 12-09-Rev, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  8. John Creedy & Solmaz Moslehi, 2008. "Voting over Taxes and Expenditure: The Role of Home Production," Department of Economics - Working Papers Series, The University of Melbourne 1052, The University of Melbourne.
  9. Tetsuo Ono, 2013. "Public Education and Social Security: A Political Economy Approach," Discussion Papers in Economics and Business, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) 13-06, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  10. Tetsuo Ono, 2013. "Public Education and Social Security: A Political Economy Approach," Discussion Papers in Economics and Business, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) 13-06-Rev, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP), revised Sep 2013.
  11. John Creedy & Solmaz Moslehi, 2007. "The Optimal Composition of Government Expenditure," Department of Economics - Working Papers Series, The University of Melbourne 1008, The University of Melbourne.
  12. Tetsuo Ono, 2014. "Economic Growth and the Politics of Intergenerational Redistribution," Discussion Papers in Economics and Business, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) 14-17, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:poleco:v:25:y:2009:i:1:p:42-55. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.