Public debt and the political economy of reforms

Pierre Boyer, Christoph Esslinger and Brian Roberson ()
Additional contact information
Christoph Esslinger: Managing Director VUI.agency
Brian Roberson: Purdue University, Department of Economics, Krannert School of Management

No 2022-17, Working Papers from Center for Research in Economics and Statistics

Abstract: How do electoral incentives influence the choice to experiment with a policy that generates uncertain future benefits? To answer this question, we examine a two-period model of redistributive politics with uncertain policy outcomes involving a mixture of private and public benefits. In equilibrium, we find that the intertemporal tradeoff between current policy costs and future benefits creates an incentive for politicians to use public debt to smooth spending across periods. The higher the share of policy that are in the form of a public good, the higher the level of available debtrelated spending on targeted policies that is necessary.

Keywords: Political Competition; Public Debt; Reforms; Redistributive Politics; Debt and Spending Limits. (search for similar items in EconPapers)
JEL-codes: C72 D72 D78 H6 (search for similar items in EconPapers)
Pages: 71 pages
Date: 2022-08-15
New Economics Papers: this item is included in nep-cdm, nep-gth and nep-pol
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http://crest.science/RePEc/wpstorage/2022-17.pdf CREST working paper version (application/pdf)

Related works:
Journal Article: Public Debt and the Political Economy of Reforms (2024)
Working Paper: Public Debt and the Political Economy of Reforms (2021)
Working Paper: Public debt and the political economy of reforms (2021)
Working Paper: Public debt and the political economy of reforms (2015)
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