determination of government debt and deficits in a dynamic political economy model. We show that this conventional wisdom relies on … economic volatility being low relative to political uncertainty. If economic volatility is high relative to political … uncertainty, then a rent-seeking government actually over-saves and over-taxes along the equilibrium path relative to a benevolent …

size of this political distortion. In this paper we study the determination of government debt and deficits in a dynamic … the long run, but only does so in the short run when economic volatility is low. Instead, when economic volatility is high …, a rent-seeking government over-saves and over-taxes along the equilibrium path relative to a benevolent government …

size of this political distortion. In this paper we study the determination of government debt and deficits in a dynamic … the long run, but only does so in the short run when economic volatility is low. Instead, when economic volatility is high …, a rent-seeking government over-saves and over-taxes along the equilibrium path relative to a benevolent government …

In the present paper it is pointed out that government debt is an obstacle to economic growth. To my belief, the remedy …