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Democracy of "Taxation-Redistribution" and Peacetime Budget Deficit

  • Konstantin Yanovskiy

    (Gaidar Institute for Economic Policy)

  • Sergey Zhavoronkov

    (Gaidar Institute for Economic Policy)

  • Dmitry Shestakov

    (Gaidar Institute for Economic Policy)

The link between an introduction of the universal suffrage and the growth of government spending has been established in some literature (Meltzer, Richard, 1981, Aidt et al., 2006, Funk and Guthmann, 2006). In this article we try to identify a more detailed mechanism behind that link. So, we addressed to the conflict of interest of bureaucrats, and of the state subsidy beneficiaries. Historically the growth of government spending might be traced to the emergence of mainstream left parties, which openly stood in favor of the nanny state and government help from the cradle to the grave[1] as a priority over the provision of pure public goods. Finally we check the hypothesis that the growth of government care correlates with the chronic illnesses of the modern state finance like budget deficit, state debt and inflation.

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File URL: http://www.iep.ru/files/RePEc/gai/wpaper/0078Yanovskiy.pdf
File Function: Revised version, 2013
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Paper provided by Gaidar Institute for Economic Policy in its series Working Papers with number 0078.

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Length: 20 pages
Date of creation: 2013
Date of revision: 2013
Handle: RePEc:gai:wpaper:0078
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  1. Acemoglu, Daron & Robinson, James A, 2006. "Persistence of Power, Elites and Institutions," CEPR Discussion Papers 5603, C.E.P.R. Discussion Papers.
  2. Konstantin Yanovskiy & Sergey Shulgin, 2013. "Institutions, Democracy And Growth In The Very Long Run," Working Papers 0082, Gaidar Institute for Economic Policy, revised 2013.
  3. Smith, Vernon L, 1980. "Experiments with a Decentralized Mechanism for Public Good Decisions," American Economic Review, American Economic Association, vol. 70(4), pages 584-99, September.
  4. Tavares, Jose & Wacziarg, Romain, 2001. "How democracy affects growth," European Economic Review, Elsevier, vol. 45(8), pages 1341-1378, August.
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