A Dynamic Theory of Public Spending, Taxation, and Debt Export

@article{citeulike:2651674, abstract = {This paper presents a political economy theory of fiscal policy. Policy choices are made by a legislature that can raise revenues via an income tax and by borrowing. Revenues can be used to finance a public good, whose value is stochastic, and pork-barrel spending. Policymaking cycles between a "business-as-usual" regime in which legislators bargain over pork, and a "responsible policymaking" regime in which policies maximize the collective good. Transitions between regimes are brought about by shocks in the value of the public good. Equilibrium tax rates are too high, public good provision is too low, and debt levels are too high.}, author = {Battaglini, Marco and Coate, Stephen}, citeulike-article-id = {2651674}, citeulike-linkout-0 = {http://dx.doi.org/10.1257/aer.98.1.201}, citeulike-linkout-1 = {http://www.ingentaconnect.com/content/aea/aer/2008/00000098/00000001/art00008}, doi = {10.1257/aer.98.1.201}, issn = {0002-8282}, journal = {The American Economic Review}, keywords = {fiscal\_policy, political\_economy}, month = {March}, number = {1}, pages = {201--236}, posted-at = {2008-07-18 07:57:44}, priority = {4}, publisher = {American Economic Association}, title = {A Dynamic Theory of Public Spending, Taxation, and Debt}, url = {http://dx.doi.org/10.1257/aer.98.1.201}, volume = {98}, year = {2008} }

TY - JOUR ID - citeulike:2651674 L3 - citeulike-article-id:2651674 N2 - This paper presents a political economy theory of fiscal policy. Policy choices are made by a legislature that can raise revenues via an income tax and by borrowing. Revenues can be used to finance a public good, whose value is stochastic, and pork-barrel spending. Policymaking cycles between a "business-as-usual" regime in which legislators bargain over pork, and a "responsible policymaking" regime in which policies maximize the collective good. Transitions between regimes are brought about by shocks in the value of the public good. Equilibrium tax rates are too high, public good provision is too low, and debt levels are too high. IS - 1 JF - The American Economic Review SN - 0002-8282 EP - 236 TI - A Dynamic Theory of Public Spending, Taxation, and Debt PB - American Economic Association VL - 98 SP - 201 KW - fiscal_policy KW - political_economy AU - Battaglini, Marco AU - Coate, Stephen PY - 2008/03// UR - http://dx.doi.org/10.1257/aer.98.1.201 ER -