TY  - JOUR
AU  - Alesina,Alberto
AU  - Perotti,Roberto
TI  - The Political Economy of Budget Deficits
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4637
PY  - 1994
Y2  - February 1994
UR  - http://www.nber.org/papers/w4637
L1  - http://www.nber.org/papers/w4637.pdf
N1  - Author contact info:
Alberto F. Alesina
Department of Economics
Harvard University
Littauer Center 210
Cambridge, MA 02138
Tel: 617/495-8388
Fax: 617/495-7730
E-Mail: aalesina@harvard.edu

Roberto Perotti
IGIER Universita' Bocconi
Via Roentgen 1
20136 Milano
ITALY
Tel: 39 02 58363073
Fax: 39 02 58363302
E-Mail: roberto.perotti@unibocconi.it
AB  - This paper provides a critical survey of the literature on politico-institutional determinants of the government budget.  We organize our discussion around two questions: Why did certain OECD countries, but not others, accumulate large public debts?  Why did these fiscal imbalances appear in the last twenty years rather than before?  We begin by discussing the 'tax smoothing' model and conclude that this approach alone cannot provide complete answers to these questions.  We will then proceed to a discussion of political economy models, which we organize in six groups: i) Models based upon opportunistic policy makers and naive voters with 'fiscal illusion'; ii) Models of intergenerational redistributions; iii) Models of debt as a strategic variable, linking the current government with the next one; iv) Models of coalition governments; v) Models of geographically dispersed interests; vi) Models emphasizing the effects of budgetary institutions.
ER  -