G2TT
来源类型Discussion paper
规范类型论文
来源IDDP8001
DP8001 Government Debt Threshold Contracts
Hans Gersbach
发表日期2010-09-23
出版年2010
语种英语
摘要Politicians tend to push the amount of public debt beyond socially desirable levels in order to increase their reelection chances. We develop a model that provides a new explanation for this behavior: office holders undertake debt-financed public projects, but postpone the timing of part of the output to the next term. This makes it difficult to replace them. As a consequence, the office-holders' reelection chances rise -- as does public debt. As a potential remedy for this inefficiency, we allow candidates for public office to offer government debt-threshold contracts. Such a contract contains an upper limit for government debt and the sanction that an office-holder violating this limit cannot stand for reelection. We show that such competitively-offered contracts contain low debt levels that limit debt financing and improve the citizens' welfare. When negative macroeconomic events occur, government debt contracts may be violated, and such shocks are stabilized.
主题Public Economics
关键词Elections Government debt Macroeconomic shocks Political contracts
URLhttps://cepr.org/publications/dp8001
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/536838
推荐引用方式
GB/T 7714
Hans Gersbach. DP8001 Government Debt Threshold Contracts. 2010.
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