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Majority Voting: A Quantitative Investigation

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Abstract

We study the tax systems that arise in a once-and-for-all majority voting equilibrium embedded within a macroeconomic model of inequality. We find that majority voting delivers (i) a small set of outcomes, (ii) zero labor income taxation, and (iii) nearly zero transfers. We find that majority voting, contrary to the literature developed in models without idiosyncratic risk, is quite powerful at restricting outcomes; however, it also delivers predictions inconsistent with observed tax systems.

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  • Daniel R. Carroll & Jim Dolmas & Eric R. Young, 2015. "Majority Voting: A Quantitative Investigation," Working Papers (Old Series) 1442, Federal Reserve Bank of Cleveland.
  • Handle: RePEc:fip:fedcwp:1442
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    Cited by:

    1. Daniel R. Carroll & Eric R. Young, 2014. "The Piketty Transition," Working Papers (Old Series) 1432, Federal Reserve Bank of Cleveland.

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    More about this item

    Keywords

    Political Economy; Essential Set; Voting; Inequality; Incomplete Markets;

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • 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

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