TY  - JOUR
AU  - Persson,Torsten
AU  - Tabellini,Guido
TI  - Political Economics and Macroeconomic Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6329
PY  - 1997
Y2  - December 1997
UR  - http://www.nber.org/papers/w6329
L1  - http://www.nber.org/papers/w6329.pdf
N1  - Author contact info:
Torsten Persson
Torsten and Ragnar Soderberg Chair in Economic Sci
Institute for International Economic Studies
Stockholm University
SE-106 91 Stockholm
SWEDEN
Tel: +46 8 163066
Fax: +46 8 6747801
E-Mail: Torsten.Persson@iies.su.se

Guido Tabellini
IGIER Universita' Bocconi
Via Roentgen 1
20136 Milano
Italy
Tel: 39 2 583 6 3305; fax 3302
E-Mail: guido.tabellini@unibocconi.it
AB  - This paper surveys the recent literature on the theory of macroeconomic policy.  We study the effect of various incentive constraints on the policy making process, such as lack of credibility, political opportunism, political ideology, and divided government.  The survey is organized in three parts. Part I deals with monetary policy in a simply Phillips curve model: it covers credibility issues, political business cycles, and optimal design of monetary institutions.  Part II deals with fiscal policy in a dynamic general equilibrium set up: the main topics here are credibility of tax policy, and political determinants of budget deficits.  Part III studies economic growth in models with endogenous fiscal policy.
ER  -