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Are We Better Off if Our Politicians Know How the Economy Works?

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  • Johan Lagerlöf

Abstract

This paper sheds light on two mechanisms that make some citizens worse off from a political leader’s having access to more information. It also addresses the question who are the losers and who are the winners. Moreover, it is discussed how the results of the analysis can be helpful in understanding some normative and positive issues concerning interest group politics. ZUSAMMENFASSUNG - (Geht es uns besser, wenn unsere Politiker wissen, wie die Wirtschaft funktioniert?) In diesem Beitrag werden zwei Mechanismen dargestellt, die dazu führen, daß Bürger schlechter gestellt werden, wenn ein Politiker Zugang zu mehr Information hat. Dabei wird auch auf die Frage eingegangen, wer die Verlierer und wer die Gewinner sind. Darüber hinaus wird erörtert, wie die Analyseergebnisse dazu beitragen können, einige normative und positive Aspekte der Vertretung von Interessengruppenpolitk zu verstehen.

Suggested Citation

  • Johan Lagerlöf, 1998. "Are We Better Off if Our Politicians Know How the Economy Works?," CIG Working Papers FS IV 98-07, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG), revised May 1999.
  • Handle: RePEc:wzb:wzebiv:fsiv98-7
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    References listed on IDEAS

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    1. Persson, Torsten & Tabellini, Guido, 1994. "Representative democracy and capital taxation," Journal of Public Economics, Elsevier, vol. 55(1), pages 53-70, September.
    2. Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 589-610, August.
    3. Alberto Alesina & Vittorio Grilli, 1991. "The European Central Bank: Reshaping Monetary Politics in Europe," NBER Working Papers 3860, National Bureau of Economic Research, Inc.
    4. Reed, W Robert, 1989. "Information in Political Markets: A Little Knowledge Can Be a Dangerous Thing," Journal of Law, Economics, and Organization, Oxford University Press, vol. 5(2), pages 355-374, Fall.
    5. Sakai, Yasuhiro, 1985. "The value of information in a simple duopoly model," Journal of Economic Theory, Elsevier, vol. 36(1), pages 36-54, June.
    6. Alesina, Alberto & Tabellini, Guido, 1988. "Credibility and politics," European Economic Review, Elsevier, vol. 32(2-3), pages 542-550, March.
    7. Waller, Christopher J & Walsh, Carl E, 1996. "Central-Bank Independence, Economic Behavior, and Optimal Term Lengths," American Economic Review, American Economic Association, vol. 86(5), pages 1139-1153, December.
    8. Potters, Jan & van Winden, Frans, 1992. "Lobbying and Asymmetric Information," Public Choice, Springer, vol. 74(3), pages 269-292, October.
    9. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
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    Keywords

    information acquisition; welfare; delegation;

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