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Policy Myopia

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Author Info
Aidt, T.
Dutta, J.
Loukoianova, E.

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Abstract

This paper develops a theory of policy myopia. Policy myopia arises when rational voters set performance standards that allow elected politicians to distort the portfolio of public investments towards short-term investments. We show that the fact that voters cannot observe immediately how much politicians invested in certain types of public goods is not in itself sufficient to generate policy myopia. Policy myopia, then, arises in societies where electoral control is imperfect or in society where tax revenues cannot be committed in advance. The analysis is motivated by a number of stylized facts about public spending patterns across time and space.

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File URL: http://www.econ.cam.ac.uk/dae/repec/cam/pdf/cwpe0344.pdf
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Publisher Info
Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0344.

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Length: 33
Date of creation: Oct 2003
Date of revision:
Handle: RePEc:cam:camdae:0344

Note: PE, Ma
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Web page: http://www.econ.cam.ac.uk/index.htm

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Related research
Keywords: Myopia; public goods; electoral accountability;

Other versions of this item:

Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information

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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.:
  1. Persson, Torsten & Roland, Gerard & Tabellini, Guido, 1997. "Separation of Powers and Political Accountability," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1163-1202, November.
    Other versions:
  2. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Governance matters," Policy Research Working Paper Series 2196, The World Bank. [Downloadable!]
  3. Nordhaus, William D, 1975. "The Political Business Cycle," Review of Economic Studies, Blackwell Publishing, vol. 42(2), pages 169-90, April. [Downloadable!] (restricted)
  4. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October. [Downloadable!] (restricted)
  5. Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306, December.
  6. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October. [Downloadable!] (restricted)
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  7. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Aggregating governance indicators," Policy Research Working Paper Series 2195, The World Bank. [Downloadable!]
  8. Kenneth Rogoff, 1990. "Equilibrium Political Budget Cycles," NBER Working Papers 2428, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. David Dreyer Lassen, 2000. "Political Accountability and the Size of Government: Theory and Cross-Country Evidence," EPRU Working Paper Series 00-20, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics. [Downloadable!]
  10. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
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