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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
Library of Congress subject classification: H Social Sciences > HB Economic Theory
H Social Sciences > HJ Public Finance
J Political Science > JA Political science (General)
Journal of Economic Literature Classification System: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legislatures, and Voting Behavior
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General
H - Public Economics > H7 - State and Local Government; Intergovernmental Relations > H71 - State and Local Taxation, Subsidies, and Revenue
Sets: Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 27 Apr 2007
URL: http://eprints.lse.ac.uk/1220/

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