Besley, Timothy and Pande, Rohini (1998) Read my lips : the political economy of information transmission. Theoretical Economics; TE/1998/355, TE/98/355. Suntory and Toyota International Centres for Economics and Related Disciplines, London School of Economics and Political Science, London, UK.
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The paper studies credible information transmission by governments. A group of heterogenous individuals have to make private investment and labour supply decisions while relying on the government for information about investment returns. The government consists of an elected citizen who chooses a redistributive strategy in addition to providing information. We give conditions under which the outcome leads to overor under-investment in high return activities and the outcome is Pareto efficient.
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