Voting on the budget deficit
Tipo de material: TextoSeries American Economic Review ; n. 1Detalles de publicación: American Economic Association; Nashville; March 1990Descripción: pp. 37-49 ilTema(s): Clasificación CDD:- H 1890 n. 1, 1990
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This paper analyzes a model in which a group of rational individuals votes over the composition and time profile of public spending. All voters agree that a balanced budget is ex ante optimal. However, if there is disagreement between current and future majorities, a balanced budget is not a political equilibrium under majority rule. Under certain conditions a majority of the voters favors a budget deficit, and the equilibrium deficit it larger the greater is the polarization among voters.
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