One of the most crucial lessons to be taken from the literature on electoral business cycles is that short-run electorally-induced fluctuations prejudice long-run welfare. Since the very first studies on the matter, authors have offered suggestions as to what should be done against this electorally-induced instability. As the government’s optimal policies depend crucially on the behaviour of voters, non-representative voting may, indeed, induce the government to behave as the representative of society’s interests. Given that elections are the appropriate mechanism to punish or to reward the behaviour of the incumbent, they can be used to turn voters, i.e. the public, into the principal who has all the incentives to motivate the government, as the agent, to choose appropriate economic policies. The paper analyses the circumstances under which an optimal contract can be established between the electorate and the government in order to guarantee that the government behaves in accordance with the true interests of society.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. 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.
Publisher Info
Article provided by Faculdade de Economia, Universidade de Coimbra in its journal Notas Económicas.
Volume (Year): (2004) Issue (Month): 20 (December) Pages: 89-101 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF