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Abstract

This Paper analyses an overlapping generation model of public good provision under repeated voting. The public good is financed through age-dependent taxation that distorts human capital investment. Taxes redistribute income both across different skill groups and across generations. We contrast the political equilibria with the Ramsey allocation, and analyse the sources of inefficiency. The political equilibria can feature both under- and over-provision of public good, as well an inefficient life-cycle profile of taxes.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4044.

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Date of creation: Sep 2003
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Handle: RePEc:cpr:ceprdp:4044

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Related research

Keywords: markov equilibrium; multiple equilibria; political economy; public good; ramsey allocation; taxation;

Other versions of this item:

Find related papers by JEL classification:

• D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
• D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
• E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
• H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
• H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
• H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

This paper has been announced in the following NEP Reports:

• NEP-MIC-2003-10-05 (Microeconomics)
• NEP-PBE-2003-10-05 (Public Economics)
• NEP-POL-2003-10-05 (Positive Political Economics)

References

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