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Inefficiency in Legislative Policy-Making: A Dynamic Analysis

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  • Stephen Coate
  • Marco Battaglini

    ()
    (Economics Princeton University)

Abstract

This paper develops an infinite horizon model of public spending and taxation in which policy decisions are determined by legislative bargaining. The policy space incorporates both productive and distributive public spending and distortionary taxation. The productive spending is investing in a public good that benefits all citizens (e.g., national defense) and the distributive spending is district-specific transfers (e.g., pork-barrel spending). Investment in the public good creates a dynamic linkage across policymaking periods. The analysis explores the dynamics of legislative policy choices, focusing on the efficiency of the steady-state level of taxation and allocation of spending. (JEL D72, E62, H20, H50)

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2005 Meeting Papers with number 209.

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Date of creation: 2005
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Handle: RePEc:red:sed005:209

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Keywords: political economy;

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References

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  1. Per Krusell & Jose-Victor Rios-Rull, 1997. "On the size of U.S. government: political economy in the neoclassical growth model," Staff Report, Federal Reserve Bank of Minneapolis 234, Federal Reserve Bank of Minneapolis.
  2. Stephen Coate & Stephen Morris, . "Policy Persistence," Penn CARESS Working Papers, Penn Economics Department 8a66677895e9fcb3f6d813c0c, Penn Economics Department.
  3. Stephen Coate & Marco Battaglini, 2005. "Inefficiency in Legislative Policy-Making: A Dynamic Analysis," 2005 Meeting Papers, Society for Economic Dynamics 209, Society for Economic Dynamics.
  4. Banks, Jeffrey S. & Duggan, John, 1999. "A Bargaining Model of Collective Choice," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 1053, California Institute of Technology, Division of the Humanities and Social Sciences.
  5. Norman,P., 2000. "Legislative bargaining and coalition formation," Working papers, Wisconsin Madison - Social Systems 12, Wisconsin Madison - Social Systems.
  6. Hassler, John & Storesletten, Kjetil & Zilibotti, Fabrizio, 2003. "Democratic Public Good Provision," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4044, C.E.P.R. Discussion Papers.
  7. Acemoglu, Daron, 2003. "Why not a political Coase theorem? Social conflict, commitment, and politics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 620-652, December.
  8. Hassler, John & Mora, Jose & Storesletten, Kjetil & Zilibotti, Fabrizio, 2002. "The Survival of the Welfare State," Seminar Papers, Stockholm University, Institute for International Economic Studies 704, Stockholm University, Institute for International Economic Studies.
  9. Torsten Persson & Guido Tabellini, 1997. "Political Economics and Macroeconomic Policy," NBER Working Papers 6329, National Bureau of Economic Research, Inc.
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  11. Hassler, John & Krusell, Per & Storesletten, Kjetil & Zilibotti, Fabrizio, 2005. "The dynamics of government," Journal of Monetary Economics, Elsevier, Elsevier, vol. 52(7), pages 1331-1358, October.
  12. Armando Gomes & Philippe Jehiel, 2005. "Dynamic Processes of Social and Economic Interactions: On the Persistence of Inefficiencies," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 113(3), pages 626-667, June.
  13. Chari, V V & Jones, Larry E & Marimon, Ramon, 1997. "The Economics of Split-Ticket Voting in Representative Democracies," American Economic Review, American Economic Association, vol. 87(5), pages 957-76, December.
  14. Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(4), pages 642-64, August.
  15. Marina Azzimonti Renzo, 2004. "On the dynamic inefficiency of governments," 2004 Meeting Papers 228, Society for Economic Dynamics.
  16. Eraslan, Hulya, 2002. "Uniqueness of Stationary Equilibrium Payoffs in the Baron-Ferejohn Model," Journal of Economic Theory, Elsevier, vol. 103(1), pages 11-30, March.
  17. Alessro Lizzeri & Nicola Persico, . "The Provision of Public Goods Under Alternative Electoral Incentives," Penn CARESS Working Papers, Penn Economics Department b96440ba0bfa06ca550ac40aa, Penn Economics Department.
  18. Eraslan, Hulya & Merlo, Antonio, 2002. "Majority Rule in a Stochastic Model of Bargaining," Journal of Economic Theory, Elsevier, vol. 103(1), pages 31-48, March.
  19. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(5), pages 940-71, October.
  20. Wittman, Donald, 1989. "Why Democracies Produce Efficient Results," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(6), pages 1395-1424, December.
  21. Kalandrakis, Anastassios, 2004. "A three-player dynamic majoritarian bargaining game," Journal of Economic Theory, Elsevier, vol. 116(2), pages 294-322, June.
  22. Acemoglu, Daron & Robinson, James A, 1999. "Inefficient Redistribution," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2122, C.E.P.R. Discussion Papers.
  23. Coate, Stephen & Morris, Stephen, 1995. "On the Form of Transfers in Special Interests," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 103(6), pages 1210-35, December.
  24. Besley, Timothy & Coate, Stephen, 1998. "Sources of Inefficiency in a Representative Democracy: A Dynamic Analysis," American Economic Review, American Economic Association, vol. 88(1), pages 139-56, March.
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