Wasteful public spending and state aid control
AbstractThe conventional academic rationale for supranational intervention to curb state aids to industry appeals to transfrontier spillovers. However, competition policy practitioners often speak in terms of curbing "wasteful" spending, regardless of whether or not any international spillovers are involved. Although it is often argued that such wasteful spending calls not for supranational state aid control but rather for better domestic political accountability, this paper argues that wasteful spending may be a by-product of accountability, not a symptom of its absence. Specifically, we describe a model in which politicians fund projects that are wasteful as a way to signal their diligence, and voters rationally reward them for this. We discuss implications for the role of state aid control mechanisms. (JEL: D72, D78, D82, H25) (c) 2006 by the European Economic Association.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by ULB -- Universite Libre de Bruxelles in its series ULB Institutional Repository with number 2013/9635.
Date of creation: 2006
Date of revision:
Publication status: Published in: European Economic Association. Journal (2006) v.4,p.513-522
Other versions of this item:
- 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 Formulation and Implementation
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Martin Gregor & Dalibor Roháč, 2009.
"The Optimal State Aid Control: No Control,"
Czech Economic Review,
Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 3(1), pages 093-113, March.
- Áron Kiss, 2009.
"Coalition politics and accountability,"
Springer, vol. 139(3), pages 413-428, June.
- Kiss, Áron, 2009. "Coalition politics and accountability," Discussion Papers, Research Unit: Market Processes and Governance SP II 2009-01, Social Science Research Center Berlin (WZB).
- Hainz, Christa & Hakenes, Hendrik, 2012.
"The politician and his banker — How to efficiently grant state aid,"
Journal of Public Economics,
Elsevier, vol. 96(1), pages 218-225.
- Christa Hainz & Hendrik Hakenes, 2009. "The Politician and his Banker – How to Efficiently Grant State Aid," Ifo Working Paper Series Ifo Working Paper No. 71, Ifo Institute for Economic Research at the University of Munich.
- J. Peter Neary, 2000.
"Of Hype and Hyperbolas - Introducing the new Economic Geography,"
200019, School Of Economics, University College Dublin.
- J.Peter Neary, 2001. "Of Hype and Hyperbolas: Introducing the New Economic Geography," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 536-561, June.
- Lars Calmfors & Giancarlo Corsetti & Michael P. Devereux & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Xavier Vives, 2008. "Chapter 4: Industrial policy," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 105-124, 02.
- Christa Hainz & Hendrik Hakenes, 2007.
"The Politician and his Banker,"
CESifo Working Paper Series
2153, CESifo Group Munich.
- Hendrik Hakanes & Christa Hainz, 2008. "The Politician and his Banker," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2008_01, Max Planck Institute for Research on Collective Goods.
- Hainz, Christa & Hakenes, Hendrik, 2007. "The Politician and his Banker," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 222, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Christoph Bertsch & Claudio Calcagno & Mark Le Quement, 2009. "State aid and tacit collusion," Economics Working Papers ECO2009/36, European University Institute.
- Giorgio Barba Navaretti & Anthony J. Venables, 2013.
"Multinationals and Industrial Policy,"
Development Working Papers
352, Centro Studi Luca d\'Agliano, University of Milano, revised 24 Apr 2013.
- Cécile Aubert & Oliver Falck & Stephan Heblich, 2008. "Subsidizing National Champions: An Evolutionary Perspective," CESifo Working Paper Series 2380, CESifo Group Munich.
- Pierre-André Buigues & Khalid Sekkat, 2011. "Public Subsidies to Business: An International Comparison," Journal of Industry, Competition and Trade, Springer, vol. 11(1), pages 1-24, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Benoit Pauwels).
If references are entirely missing, you can add them using this form.