It has been recognized that the optimal strategy of a government is generally time-inconsistent: optimality requires that the government take into account expectations effects in the formulation of its policy and to ignore these effects when applying the policy. In order to analyse the problem,...

This paper sets a framework for analysing how memoryless voters may come to elect and re-elect a committed policy-maker. Policy-makers, we assume, are trusted to implement the policy that they announce ex ante (and do implement it, if elected and re-elected). Voters, however, are never bound by...

The authors study different solutions to a simple one-dimensional linear qua dratic game with a large number of private agents and a government. A "time-consistent" solution is defined as a solution to the Hamilton- Jacobi-Bellman equation, i.e., as a policy for which the government has no...