UZH-Logo

Maintenance Infos

The political color of fiscal responsability


Müller, Andreas; Storesletten, Kjetil; Zilibotti, Fabrizio (2015). The political color of fiscal responsability. Journal of the European Economic Association, 14(1):252-302.

Abstract

We propose a dynamic general equilibrium model that yields testable implications about the fiscal policy run by governments of different political color. Successive generations of voters choose taxation, expenditure, and government debt through repeated elections. Voters are heterogeneous by age and by the intensity of their preferences for public good provision. The political equilibrium switches stochastically between left- (pro-public goods) and right-leaning (pro-private consumption) governments. A shift to the left (right) is associated with a fall (increase) in government debt, an increase (fall) in taxation, and an increase (fall) in government expenditures. However, left-leaning governments engage in more debt accumulation during recessions. These predictions are shown to be consistent with the time-series evidence for the United States in the postwar period, and also with the evidence for a panel of OECD countries.

Abstract

We propose a dynamic general equilibrium model that yields testable implications about the fiscal policy run by governments of different political color. Successive generations of voters choose taxation, expenditure, and government debt through repeated elections. Voters are heterogeneous by age and by the intensity of their preferences for public good provision. The political equilibrium switches stochastically between left- (pro-public goods) and right-leaning (pro-private consumption) governments. A shift to the left (right) is associated with a fall (increase) in government debt, an increase (fall) in taxation, and an increase (fall) in government expenditures. However, left-leaning governments engage in more debt accumulation during recessions. These predictions are shown to be consistent with the time-series evidence for the United States in the postwar period, and also with the evidence for a panel of OECD countries.

Citations

1 citation in Web of Science®
2 citations in Scopus®
Google Scholar™

Altmetrics

Downloads

6 downloads since deposited on 18 Feb 2016
6 downloads since 12 months
Detailed statistics

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:February 2015
Deposited On:18 Feb 2016 14:29
Last Modified:30 Apr 2016 07:53
Publisher:Wiley-Blackwell Publishing, Inc.
ISSN:1542-4766
Additional Information:This is the peer reviewed version of the following article: Müller, A. et al: (2016), THE POLITICAL COLOR OF FISCAL RESPONSIBILITY. Journal of the European Economic Association, 14: 252–302, which has been published in final form at http://doi.org/10.1111/jeea.12154. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving (http://olabout.wiley.com/WileyCDA/Section/id-820227.html#terms).
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.1111/jeea.12154

Download

[img]
Content: Published Version
Filetype: PDF - Registered users only
Size: 578kB
View at publisher
[img]
Content: Accepted Version
Filetype: PDF - Registered users only until 13 April 2017
Size: 492kB
Embargo till: 2017-04-13

TrendTerms

TrendTerms displays relevant terms of the abstract of this publication and related documents on a map. The terms and their relations were extracted from ZORA using word statistics. Their timelines are taken from ZORA as well. The bubble size of a term is proportional to the number of documents where the term occurs. Red, orange, yellow and green colors are used for terms that occur in the current document; red indicates high interlinkedness of a term with other terms, orange, yellow and green decreasing interlinkedness. Blue is used for terms that have a relation with the terms in this document, but occur in other documents.
You can navigate and zoom the map. Mouse-hovering a term displays its timeline, clicking it yields the associated documents.

Author Collaborations