Reelection or term limits? The short and the long view of economic policy
AbstractAn incumbent's drive for reelection can lead to political budget cycles. The distortion cycles cause in economic policy may be offset by the information they indirectly provide about the incumbent's competency. The informative content of cycles depends on the sophistication of voters, i.e. on whether they are rational or near rational. In a framework of individual candidates, constitutional clauses that prohibit the reelection of the president eliminate political budget cycles. One-term limits that allow non-immediate reelection also shift the focus from short-run cycles to the long-run soundness of economic policies, and have superior welfare properties. Hence, the choice is not reelection or not, but rather immediate or non-immediate reelection.
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Bibliographic InfoPaper provided by Universidad del CEMA in its series CEMA Working Papers: Serie Documentos de Trabajo. with number 144.
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rotation principle; term limits; non-immediate reelection; political budget cycles; rational and near rational voters.;
Other versions of this item:
- Jorge Streb, 1999. "Reelection or term limits? The short and the long run view of economic policy," Estudios de Economia, University of Chile, Department of Economics, vol. 26(2 Year 19), pages 187-206, December.
- D7 - Microeconomics - - Analysis of Collective Decision-Making
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
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