TY  - JOUR
AU  - Battaglini,Marco
AU  - Coate,Stephen
TI  - Inefficiency in Legislative Policy-Making: A Dynamic Analysis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11495
PY  - 2005
Y2  - August 2005
UR  - http://www.nber.org/papers/w11495
L1  - http://www.nber.org/papers/w11495.pdf
N1  - Author contact info:
Marco Battaglini
Department of Economics
Fisher Hall
Princeton University
Princeton, NJ 08544
Tel: 609/258-4002
Fax: 609/258-6419
E-Mail: mbattagl@princeton.edu

Stephen Coate
Department of Economics
Cornell University
Uris Hall
Ithaca, NY 14853-7601
Tel: 607/255-1912
Fax: 215/573-2057
E-Mail: sc163@cornell.edu
M2  - featured in NBER digest on 2005-08-01
AB  - This paper develops an infinite horizon model of public spending and taxation in which policy
decisions are determined by legislative bargaining. The policy space incorporates both productive
and distributive public spending and distortionary taxation. The productive spending is investing in
a public good that benefits all citizens (e.g., national defense or air quality) and the distributive
spending is district-specific transfers (e.g., pork barrel spending). Investment in the public good
creates a dynamic linkage across policy-making periods. The analysis explores the dynamics of
legislative policy choices, focusing on the efficiency of the steady state level of taxation and
allocation of tax revenues. The model sheds new light on the efficiency of legislative policy-making
and has a number of novel positive implications.
ER  -