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The political economy of redistribution under asymmetric information

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  • Dhami, Sanjit

Abstract

This paper examines the political economy of redistribution when voters have asymmetric information about the redistributive preferences of politicians and the latter cannot make credible policy commitments. The candidates in each party are endogenously selected by a process of Nash Bargaining between the competing factions. In equilibrium, there is "partial convergence" of redistributive policies, support for "Director's Law", the possibility of "policy reversals" across the parties, and "inter term tax variability" (political budget cycles) during the tenure of a politician. The effect of inequality on the magnitude of the redistributive activity depends in important ways on the incentives and constraints facing politicians.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 87 (2003)
Issue (Month): 9-10 (September)
Pages: 2069-2103

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Handle: RePEc:eee:pubeco:v:87:y:2003:i:9-10:p:2069-2103

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Web page: http://www.elsevier.com/locate/inca/505578

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Cited by:
  1. Leigh, Andrew, 2008. "Estimating the impact of gubernatorial partisanship on policy settings and economic outcomes: A regression discontinuity approach," European Journal of Political Economy, Elsevier, vol. 24(1), pages 256-268, March.
  2. Aidt, T.S. & Shvets, J., 2011. "Distributive Politics and Electoral Incentives: Evidence from Seven US State Legislatures," Cambridge Working Papers in Economics 1130, Faculty of Economics, University of Cambridge.
  3. Jon X. Eguia & Antonio Nicolò, 2011. "On the Efficiency of Partial Information in Elections," Carlo Alberto Notebooks 234, Collegio Carlo Alberto.
  4. Konishi, Hideki, 2006. "Spending cuts or tax increases? The composition of fiscal adjustments as a signal," European Economic Review, Elsevier, vol. 50(6), pages 1441-1469, August.

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