G2TT
来源类型Discussion paper
规范类型论文
来源IDDP11945
DP11945 The Limits of Political Compromise: Debt Ceilings and Political Turnover
Emanuel Ornelas
发表日期2017-03-28
出版年2017
语种英语
摘要We study the desirability of limits on the public debt and of political turnover in an economy where incumbents have an incentive to set public expenditures above the socially optimal level due to rent-seeking motives. Parties alternate in office and cannot commit to future policies, but they can forge a political compromise where each party curbs excessive spending when in office if it expects future governments to do the same. In contrast to the received literature, we find that strict limits on government borrowing can exacerbate political economy distortions by making a political compromise unsustainable. This tends to happen when political turnover is limited. Conversely, a tight limit on the public debt fosters a compromise that yields the efficient outcome if political turnover is vigorous. Our analysis thus suggests that to sustain good economic policies, a society needs to restrict either the extent of political turnover or the ability of governments to issue debt, but not both.
主题Macroeconomics and Growth ; Public Economics
关键词Debt limits Efficient policies Political turnover Fiscal rules
URLhttps://cepr.org/publications/dp11945
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/540757
推荐引用方式
GB/T 7714
Emanuel Ornelas. DP11945 The Limits of Political Compromise: Debt Ceilings and Political Turnover. 2017.
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