Intergenerational Redistribution with Short-lived Governments

Gene Grossman and Elhanan Helpman

No 1396, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the politics of intergenerational redistribution in an overlapping-generations model with short-lived governments. The successive governments – who care about the welfare of the currently-living generations and possibly about campaign contributions – are unable to pre-commit the future course of redistributive taxation. In a stationary politico-economic equilibrium, the tax rate in each period depends on the current state of the economy and all expectations about future political outcomes are fulfilled. We find that multiple stationary equilibria exist in many political settings. Steady-state welfare is often lower than it would be in the absence of redistributive politics.

Keywords: Generations; Redistribution (search for similar items in EconPapers)
JEL-codes: E1 H1 H2 (search for similar items in EconPapers)
Date: 1996-05
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Intergenerational Redistribution with Short-Lived Governments (1998)
Working Paper: Intergenerational Redistribution with Short-Lived Governments (1996)
Working Paper: Intergenerational Redistribution with Short-Lived Governements (1996)
Working Paper: Intergenerational Redistribution with Short-Lived Governments (1996)
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