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Incumbent behavior: vote seeking, tax setting and yardstick competition

Besley, Timothy and Case, Anne (1995) Incumbent behavior: vote seeking, tax setting and yardstick competition. American Economic Review, 85 (1). pp. 25-45. ISSN 0002-8282

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Abstract

This paper develops a model of the political economy of tax-setting in a multijurisdictional world, where voters' choices and incumbent behavior are determined simultaneously. Voters are assumed to make comparisons between jurisdictions to overcome political agency problems. This forces incumbents into a (yardstick)competition in which they care about what other incumbents are doing. We provide a theoretical framework and empirical evidence using U.S. state data from 1960 to 1988. The results are encouraging to the view that vote-seeking and tax-setting are tied together through the nexus of yardstick competition.

Item Type: Article
Official URL: http://www.aeaweb.org/aer/index.php
Additional Information: © 1995 American Economic Association
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HJ Public Finance
J Political Science > JA Political science (General)
Sets: Collections > Economists Online
Date Deposited: 27 Apr 2007
Last Modified: 24 Apr 2012 08:40
URI: http://eprints.lse.ac.uk/id/eprint/1220

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