A distributional theory of government growth
Abstract
This paper presents a closed form solution for time-consistent taxation and public spending in a dynamic game between government and median voter. Extending Meltzer and Richardâs static analysis of government size the paper offers a theory of growth of government. At low stages of economic development the median voter, identified as a relatively poor worker, prefers to have no or only small redistributive taxation in order to foster savings. Through this channel he expects improvements of his labor productivity and wage. At higher stages of development, however, when capital is relatively abundant and prospects of further labor productivity gains through capital accumulation are smaller, the incentive to tax and redistribute income rises. Yet, in line with previous work on growth and infrastructure spending the median voter prefers a constant share of productive public spending at all times. Hence, government growth is solely driven by an expanding welfare state.(This abstract was borrowed from another version of this item.)
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Bibliographic Info
Article provided by Springer in its journal Public Choice.
Volume (Year): 132 (2007)
Issue (Month): 3 (September)
Pages: 305-318
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Web page: http://www.springerlink.com/link.asp?id=100332
Related research
Keywords: Redistribution; Government growth; Welfare state; Markov–perfect equilibrium;Other versions of this item:
- Holger Strulik, 2004. "A Distributional Theory of Government Growth," Discussion Papers 04-26, University of Copenhagen. Department of Economics.
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Jorge Martinez-Vazquez & Blanca Moreno-Dodson & VIoleta Vulovic, 2012.
"The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries,"
International Center for Public Policy Working Paper Series, at AYSPS, GSU
paper1225, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
- Jorge Martínez-Vázquez & Violeta Vulovic & Blanca Moreno Dodson, 2012. "The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries," Hacienda Pública Española, IEF, vol. 200(1), pages 95-130, March.
- Andreas Georgiadis & Alan Manning, 2007.
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dp0816, Centre for Economic Performance, LSE.
- Andreas Georgiadis & Alan Manning, 2012. "Spend it like Beckham? Inequality and redistribution in the UK, 1983–2004," Public Choice, Springer, vol. 151(3), pages 537-563, June.
- Holger Stichnoth, 2012. "Does immigration weaken natives’ support for the unemployed? Evidence from Germany," Public Choice, Springer, vol. 151(3), pages 631-654, June.
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