Political Economics and Macroeconomic Policy

Torsten Persson () and Guido Tabellini

No 1759, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper surveys the recent literature on the theory of macroeconomic policy. We study the effect of various incentive constraints on the policy-making process, such as lack of credibility, political opportunism, political ideology, and divided government. The survey is organized in three parts. Part I deals with monetary policy in a simple Phillips curve model, and focuses on credibility, political business cycles, and optimal design of monetary institutions. Part II deals with fiscal policy in a dynamic general equilibrium set up; the main topics covered in this section are credibility of tax policy, and political determinants of budget deficits. Part III studies economic growth in models with endogenous fiscal policy.

Keywords: Budget Deficits; Credibility; Fiscal Policy; Monetary Policy; Politics (search for similar items in EconPapers)
JEL-codes: E5 E6 H2 H3 O1 (search for similar items in EconPapers)
Date: 1997-12
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Citations: View citations in EconPapers (266)

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Related works:
Chapter: Political economics and macroeconomic policy (1999)
Working Paper: Political Economics and Macroeconomic Policy (1997)
Working Paper: Political Economics and Macroeconomic Policy (1997)
Working Paper: Political Economics and Macroeconomic Policy (1997)
Working Paper: Political Economics and Macroeconomic Policy
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