NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Debts and Deficits with Fragmented Fiscal Policymaking

Andres Velasco

NBER Working Paper No. 6286
Issued in November 1997
NBER Program(s):Public Economics

This paper develops a political-economic model of fiscal policy - one in which government resources are a common property' out of which interest groups can finance expenditures on their preferred items. This setup has striking macroeconomic implications. Transfers are higher than a benevolent planner would choose; fiscal deficits emerge even when there are no reasons for intertemporal smoothing, and in the long run government debt tends to be excessively high; peculiar time profiles for transfers can emerge, with high positive net transfers early on giving way to high taxes later on; and multiple dynamic equilibrium paths can occur starting at the same initial level of government debt.

download in pdf format
   (1069 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w6286

Published: Velasco, Andres. "Debts And Deficits With Fragmented Fiscal Policymaking," Journal of Public Economics, 2000, v76(1,Apr), 105-125.

Users who downloaded this paper also downloaded* these:
Velasco w6336 A Model of Endogenous Fiscal Deficits and Delayed Fiscal Reforms
Velasco A Model of Endogenous Fiscal Deficits and Delayed Fiscal Reforms
Alesina and Perotti Budget Deficits and Budget Institutions
Drazen and Eslava w12190 Pork Barrel Cycles
Talvi and Vegh w7499 Tax Base Variability and Procyclical Fiscal Policy
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us