Multiple Equilibria in the Welfare State with Costly Policies

Alvaro Javier Forteza ()

Economics Working Papers from School of Economics and Management, University of Aarhus

Abstract: Benevolent governments lacking commitment ability might provide too much insurance. Private agents might free ride on the government concern and exert too little effort. The cost of implementing the redistributive policy may work as a commitment device, alleviating the credibility problem.

Keywords: WELFARE ECONOMICS; INFORMATION; GOVERNMENT; FISCAL POLICY; CAPITALISM (search for similar items in EconPapers)
JEL-codes: D60 D82 H10 H30 I30 P16 (search for similar items in EconPapers)

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