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Rotten Parents and Disciplined Children: A Politico-Economic Theory of Public Expenditure and Debt

Author

Listed:
  • Zheng Song

    (Fudan University)

  • Kjetil Storesletten
  • Fabrizio Zilibotti

Abstract

We test the implications of the theory in the presence of political shocks affecting the taste for public consumption. Government debt is mean reverting and left-wing governments are predicted to accumulate less debt. Data from the US and from a panel of 21 OECD countries confirm the main predictions of the theory.

Suggested Citation

  • Zheng Song & Kjetil Storesletten & Fabrizio Zilibotti, 2007. "Rotten Parents and Disciplined Children: A Politico-Economic Theory of Public Expenditure and Debt," 2007 Meeting Papers 685, Society for Economic Dynamics.
    • Handle: RePEc:red:sed007:685
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    More about this item

    JEL classification:

    • 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; Modern Monetary Theory
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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