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Dynamic Political Choice In Macroeconomics

Author

Listed:
  • John Hassler

    (IIES, Stockholm University, Centre for Economic Policy Research,)

  • Kjetil Storesletten

    (University of Oslo, IIES, Stockholm University, Centre for Economic Policy Research,)

  • Fabrizio Zilibotti

    (IIES, Stockholm University, Centre for Economic Policy Research, University College,)

Abstract

We analyze positive theories of redistribution, social insurance and public good provision in a dynamic macroeconomic framework. Political outcomes are determined via repeated voting and driven by a conflict of interests between agents. Voters and politicians rationally forecast the impact of current political choices on future political and economic outcomes. The theory is consistent with large differences in the size of governments across societies. These need not rely on intrinsic differences in preferences or technology, but may be driven by self-fulfilling expectations about the robustness of the welfare state. (JEL: D72, E62, H11, H31, P16) Copyright (c) 2003 The European Economic Association.

Suggested Citation

  • John Hassler & Kjetil Storesletten & Fabrizio Zilibotti, 2003. "Dynamic Political Choice In Macroeconomics," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 543-552, 04/05.
    • Handle: RePEc:tpr:jeurec:v:1:y:2003:i:2-3:p:543-552
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    References listed on IDEAS

    as
    1. Roland Benabou, 2000. "Unequal Societies: Income Distribution and the Social Contract," American Economic Review, American Economic Association, vol. 90(1), pages 96-129, March.
    2. Gilles Saint-Paul, 2001. "The Dynamics of Exclusion and Fiscal Conservatism," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 275-302, April.
    3. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(1), pages 35-52.
    4. Hassler, John & Storesletten, Kjetil & Zilibotti, Fabrizio, 2007. "Democratic public good provision," Journal of Economic Theory, Elsevier, vol. 133(1), pages 127-151, March.
    5. Per Krusell & José-Víctor Ríos-Rull, 1996. "Vested Interests in a Positive Theory of Stagnation and Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(2), pages 301-329.
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    Cited by:

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    2. Mathias Trabandt, 2006. "Optimal Pre-Announced Tax Reforms Under Valuable And Productive Government Spending," 2006 Meeting Papers 668, Society for Economic Dynamics.
    3. Fernando Tohmé & M. Ángeles Caraballo & Carlos Dabús, 2022. "Instability, political regimes and economic growth. A theoretical framework," Metroeconomica, Wiley Blackwell, vol. 73(1), pages 291-317, February.
    4. Mateos-Planas, Xavier, 2008. "A quantitative theory of social security without commitment," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 652-671, April.

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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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