Debts and Deficits with Fragmented Fiscal Policymaking
This paper develops a political-economy model of fiscal policy - one in which government resources are a "common property" out of which interest groups can finance expenditures on their preferred items. This setup has striking macroeconomic implications. Transfers are higher than a benevolent planner would choose them to be; fiscal deficits emerge even when there are no reasons for intetemporal smoothing, and in the long run government debts tend to be excessively high; peculiar time profiles for transferscan emerge.
|Date of creation:||1998|
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|Order Information:|| Postal: C.V. Starr Center, Department of Economics, New York University, 19 W. 4th Street, 6th Floor, New York, NY 10012|
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