Klein, Paul; Krusell, Per; Ríos-Rull, José-Víctor - In: Review of Economic Studies 75 (2008) 3, pp. 789-808
In this paper we study how a benevolent government that cannot commit to future policy should trade off the costs and benefits of public expenditure. We characterize and solve for Markov-perfect equilibria of the dynamic game between successive governments. The characterization consists of an...
