Read my lips: the political economy of information transmission
The paper studies credible information transmission by governments. A group of heterogenous individuals have to make private investment and labor supply decisions while relying on the government for information about investment returns. The government consists of a an elected citizen who chooses a redistributive strategy in addition to providing information. We give conditions under which the outcome leads to over- or under-investment in high return activities and the outcome is Pareto efficient.
|Date of creation:||01 Oct 1998|
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References listed on IDEAS
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- Coate, Stephen & Morris, Stephen, 1995. "On the Form of Transfers in Special Interests," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1210-35, December.
- Stein, Jeremy C, 1989. "Cheap Talk and the Fed: A Theory of Imprecise Policy Announcements," American Economic Review, American Economic Association, vol. 79(1), pages 32-42, March.
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