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Intergenerational Redistribution with Short-Lived Governments

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  • Grossman, Gene M
  • Helpman, Elhanan

Abstract

The authors study the politics of intergenerational redistribution in an overlapping generations model with short-lived governments. The successive governments--who care about the welfare of the currently living generations and possibly about campaign contributions--are unable to precommit the future course of redistributive taxation. In a stationary politico-economic equilibrium, the intergenerational transfer in each period depends on the current value of the state variable and all expectations about future political outcomes are fulfilled. The authors find that there exist multiple stationary equilibria in many political settings. Steady-state welfare is often lower than it would be in the absence of redistributive politics.

Suggested Citation

  • Grossman, Gene M & Helpman, Elhanan, 1998. "Intergenerational Redistribution with Short-Lived Governments," Economic Journal, Royal Economic Society, vol. 108(450), pages 1299-1329, September.
  • Handle: RePEc:ecj:econjl:v:108:y:1998:i:450:p:1299-1329
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • H80 - Public Economics - - Miscellaneous Issues - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D30 - Microeconomics - - Distribution - - - General

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