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place? We develop a political economy theory of the endogenous emergence of fiscal crises, based on the idea that the … more likely - is higher, as is the probability of a crisis, the greater the level of favoritism. If the favored group is … important enough to be pivotal when society votes on the entitlement level, favoritism also leads to greater public expenditure …
Persistent link: https://www.econbiz.de/10011721727
place? We develop a political economy theory of the endogenous emergence of fiscal crises, based on the idea that the … more likely - is higher, as is the probability of a crisis, the greater the level of favoritism. If the favored group is … important enough to be pivotal when society votes on the entitlement level, favoritism also leads to greater public expenditure …
Persistent link: https://www.econbiz.de/10011744963
Episodes of debt accumulation have been a recurrent feature of the global economy over the past fifty years. Since 2010, emerging and developing economies have experienced another wave of historically large and rapid debt accumulation. Similar past debt buildups have often ended in widespread...
Persistent link: https://www.econbiz.de/10012195063
I develop a political economy theory of dynamic fiscal competition via public spending and debt. With internationally …
Persistent link: https://www.econbiz.de/10011977194
High public debt combined with low capacities of the state to raise taxes and to support markets can put even developed countries into turmoil. However, the existing political economy literature of state capacity, pioneered by Besley and Persson (2009), does not investigate the interaction of...
Persistent link: https://www.econbiz.de/10010482518
We develop a two-period model of redistributive politics in which two politicians compete in an election in each period. In the first period, the politicians propose both whether to experiment with an efficient reform with uncertain benefits and choose the amount of public debt. Politicians also...
Persistent link: https://www.econbiz.de/10012491550
Political risk is a significant determinant of bond yields and economic growth in both developed and emerging markets and we develop a debt sustainability analysis model with both channels using a country ratings proxy of political risk. Political risk also affects a sovereign's willingness to...
Persistent link: https://www.econbiz.de/10015406629
The global surge in independent fiscal councils (IFCs) raises three related questions: How can IFCs improve the conduct of fiscal policy? Are they simultaneously desirable for voters and elected policymakers? And are they resilient to changes in political conditions? We build a model in which...
Persistent link: https://www.econbiz.de/10011697387
We consider an economy where competing political parties alternate in office. Due to rent-seeking motives, incumbents have an incentive to set public expenditures above the socially optimum level. Parties cannot commit to future policies, but they can forge a political compromise where each...
Persistent link: https://www.econbiz.de/10010340378
Zilibotti (2012) to incorporate wage inequality within each country. In this extended framework, we present conflict within and … across generations over fiscal policy and show that a low-inequality country realizes tight fiscal policy with low public … debt accumulation, whereas a high-inequality country experiences loose fiscal policy with high public debt accumulation …
Persistent link: https://www.econbiz.de/10011122651