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Towards Micropolitical Foundations of Public Finance

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  • Torsten Persson
  • Gerard Roland
  • Guido Tabellini

Abstract

Observed fiscal policy reflects the incentives embedded in political institutions. In this paper, we illustrate the effects of two general institutional features: separation of powers, which is common in Presidential-Congressional political systems, and legislative cohesion, which is typical of parliamentary systems. Compared to a simple legislative game, separation of powers brings about a smaller size of government and lower waste, whereas legislative cohesion induces a more equal distribution, but more waste and higher taxes.

Suggested Citation

  • Torsten Persson & Gerard Roland & Guido Tabellini, "undated". "Towards Micropolitical Foundations of Public Finance," Working Papers 119, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    • Handle: RePEc:igi:igierp:119
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    1. Torsten Persson & Gerard Roland & Guido Tabellini, 2000. "Comparative Politics and Public Finance," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1121-1161, December.
    2. Baron, David P. & Ferejohn, John A., 1989. "Bargaining in Legislatures," American Political Science Review, Cambridge University Press, vol. 83(4), pages 1181-1206, December.
    3. Persson, Torsten, 1998. "Economic Policy and Special Interest Politics," Economic Journal, Royal Economic Society, vol. 108(447), pages 310-327, March.
    4. Daniel Diermeier & Timothy J. Feddersen, 1996. "Disciplined Coalitions and Redistribution: The Effect of the Vote of Confidence Procedure on Legislative Bargaining," Discussion Papers 1171, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    5. Fershtman, Chaim & Judd, Kenneth L & Kalai, Ehud, 1991. "Observable Contracts: Strategic Delegation and Cooperation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 551-559, August.
    6. John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, vol. 50(1), pages 5-25, January.
    7. Torsten Persson & Gérard Roland & Guido Tabellini, 1997. "Separation of Powers and Political Accountability," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1163-1202.
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