Why is Fiscal Policy Often Procyclical?

Alberto Alesina, Filipe Campante and Guido Tabellini

Working Paper from Harvard University OpenScholar

Abstract: Fiscal policy is procyclical in many developing countries. We explain this policy failure with a political agency problem. Procyclicality is driven by voters who seek to ?starve the Leviathan? to reduce political rents. Voters observe the state of the economy but not the rents appropriated by corrupt governments. When they observe a boom, voters optimally demand more public goods or lower taxes, and this induces a procyclical bias in fiscal policy. The empirical evidence is consistent with this explanation: Procyclicality of fiscal policy is more pronounced in more corrupt democracies.

New Economics Papers: this item is included in nep-lam, nep-mac, nep-pbe and nep-pol
References: Add references at CitEc
Citations: View citations in EconPapers (333)

Downloads: (external link)
http://scholar.harvard.edu/campante/node/248206

Related works:
Journal Article: Why is Fiscal Policy Often Procyclical? (2008)
Working Paper: Why Is Fiscal Policy Often Procyclical? (2008)
Working Paper: Why is Fiscal Policy often Procyclical? (2005)
Working Paper: Why is fiscal policy often procyclical? (2005)
Working Paper: Why is fiscal policy often procyclical? (2005)
Working Paper: Why Is Fiscal Policy Often Procyclical? (2005)
Working Paper: Why is Fiscal Policy Often Procyclical? (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:qsh:wpaper:248206

Access Statistics for this paper

More papers in Working Paper from Harvard University OpenScholar Contact information at EDIRC.
Bibliographic data for series maintained by Richard Brandon ( this e-mail address is bad, please contact ).