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Fiscal restraints and voter welfare

Besley, Timothy and Smart, Michael (2007) Fiscal restraints and voter welfare. Journal of Public Economics, 91 (3-4). pp. 755-773. ISSN 0047-2727

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Identification Number: 10.1016/j.jpubeco.2006.09.009


This paper explores the logic of fiscal restraints in a political agency model with both moral hazard and adverse selection. The role of the political process is both to discipline incumbents who may act against the public interest and to sort in those politicians who are most likely act in voters' interests. We use the model to examine the optimality of inefficient taxation, limits on the size of government, increasing transparency, and yardstick competition. Some conclusions are surprising. For example, we show that some forms of fiscal restraint can only be desirable when incumbents are sufficiently likely to be benevolent.

Item Type: Article
Official URL:
Additional Information: © 2006 Published by Elsevier B.V.
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
J Political Science > JF Political institutions (General)
JEL classification: H - Public Economics > H1 - Structure and Scope of Government
H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents
Date Deposited: 30 Mar 2011 10:56
Last Modified: 13 Feb 2024 21:39

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