Government size, the role of commitments

Salvatore Modica, Giuseppe Albanese

Risultato della ricerca: Article

Abstract

We explore the hypothesis that long-term commitments affect the dynamics of government expenditure. With the aid of a simple median-voter model we interpret the pattern of increasing-then-constant tax rates observed in OECD countries in the second half of the last century: persistence of public expenditure and a lower bound on new interventions will push government size upward, and preferences of the electorate put a halt to this growth at some point. In this view, the fiscal policy variable is seen to consist of only a part of the total expenditure, the rest being predetermined by its past level.
Lingua originaleEnglish
pagine (da-a)532-546
Numero di pagine15
RivistaOxford Bulletin of Economics and Statistics
Volume74
Stato di pubblicazionePublished - 2012

All Science Journal Classification (ASJC) codes

  • Statistics and Probability
  • Social Sciences (miscellaneous)
  • Economics and Econometrics
  • Statistics, Probability and Uncertainty

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