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Hyperbolic Discounting and Politics: The beneficial effects of bureaucrats

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  • Marcus Drometer

Abstract

This paper introduces hyperbolic discounting into politics. In our model, politicians act according to the preferences of voters in order to be re-elected. As voters' preferences are dynamically inconsistent, the political process results in an allocation of the public budget that is distorted towards consumption ex- penditures. We show that this inefficiency is mitigated when the influence of bureaucrats who favour an excessive supply of public goods is taken into ac- count. Finally, we derive a positive relationship between the optimal level of a bureaucracy's influence and the relevance of long-term investments in a given policy area.

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File URL: http://www.bgpe.de/texte/DP/008_drometer.pdf
File Function: First version, 2006
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Bibliographic Info

Paper provided by Bavarian Graduate Program in Economics (BGPE) in its series Working Papers with number 008.

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Length: 20 pages
Date of creation: Nov 2006
Date of revision:
Handle: RePEc:bav:wpaper:008_drometer

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Web page: http://www.bgpe.de/
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Related research

Keywords: Political Agency; Hyperbolic Discounting; Bureaucracy;

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