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A Theory of Political Competition over Military Policy and Income Redistribution

Listed author(s):
  • Yoshihara, Naoki

We discuss political competition games between Left and Right parties, in which the policy space is two dimensional. One issue is the choice of proportional tax rate, and the second is the allocation of tax revenue between military policies and social welfare policies. On these political issues, the stylized fact is that left-wing parties prefer higher tax rates and lower military expenditure than do right-wing parties. We examine the kinds of political environments in which this fact can be rationalized as the equilibrium outcome of a given political game. By adopting the notion of the party-unanimity Nash equilibrium [Roemer (1998; 1999; 2001; 2005)], not only voters' economic motivations, but also their ideological positions are shown to be crucial factors in explaining stylized party behavior.

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Paper provided by Institute of Economic Research, Hitotsubashi University in its series Discussion Paper Series with number a503.

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Length: 31, [1] p.
Date of creation: Jul 2008
Handle: RePEc:hit:hituec:a503
Note: This version June 2008
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