Dynamic political choice in macroeconomics

John Hassler, Kjetil Storesletten, Fabrizio Zilibotti

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish (US)
Pages (from-to)543-552
Number of pages10
JournalJournal of the European Economic Association
Volume1
Issue number2-3
DOIs
StatePublished - 2003
Externally publishedYes

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