This paper studies the effects of asymmetries in re-election probabilities across parties on public policy and its subsequent propagation to the economy. The struggle between groups that disagree on targeted transfers results in governments being endogenously short-sighted: Systematic...

This paper analyzes the optimal level of discretion in policymaking. Our application is a dynamic fiscal policy model in which the government has a present-bias towards public spending. Society trades off its desire to allow the government to react to its private information about the state of...