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Dynamic political choice in macroeconomics


Hassler, John; Storesletten, Kjetil; Zilibotti, Fabrizio (2003). Dynamic political choice in macroeconomics. Journal of the European Economic Association, 1(2-3):543-552.

Abstract

We analyze positive theories of redistribution, social insurance and public good provision in a dynamic macroeconomic framework. Political outcomes are determined via repeated voting and driven by a conflict of interests between agents. Voters and politicians rationally forecast the impact of current political choices on future political and economic outcomes. The theory is consistent with large differences in the size of governments across societies. These need not rely on intrinsic differences in preferences or technology, but may be driven by self-fulfilling expectations about the robustness of the welfare state.

We analyze positive theories of redistribution, social insurance and public good provision in a dynamic macroeconomic framework. Political outcomes are determined via repeated voting and driven by a conflict of interests between agents. Voters and politicians rationally forecast the impact of current political choices on future political and economic outcomes. The theory is consistent with large differences in the size of governments across societies. These need not rely on intrinsic differences in preferences or technology, but may be driven by self-fulfilling expectations about the robustness of the welfare state.

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1 citation in Web of Science®
2 citations in Scopus®
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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:2003
Deposited On:14 May 2008 09:03
Last Modified:05 Apr 2016 12:23
Publisher:MIT Press
ISSN:1542-4766
Publisher DOI:10.1162/154247603322391189
Permanent URL: http://doi.org/10.5167/uzh-2487

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