Rotten Parents and Disciplined Children: A Politico-Economic Theory of Public Expenditure and Debt
We test the implications of the theory in the presence of political shocks affecting the taste for public consumption. Government debt is mean reverting and left-wing governments are predicted to accumulate less debt. Data from the US and from a panel of 21 OECD countries confirm the main predictions of the theory.
Year of publication: |
2007
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Authors: | Song, Zheng ; Storesletten, Kjetil ; Zilibotti, Fabrizio |
Institutions: | Society for Economic Dynamics - SED |
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