TY  - JOUR
AU  - Velasco,Andres
TI  - Debts and Deficits with Fragmented Fiscal Policymaking
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6286
PY  - 1997
Y2  - November 1997
UR  - http://www.nber.org/papers/w6286
L1  - http://www.nber.org/papers/w6286.pdf
N1  - Author contact info:
Andres Velasco
Marne 2962
Las Condes.
Santiago
CHILE
Tel: 56983616001
E-Mail: avbranes@gmail.com
AB  - 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.
ER  -