Budget deficit, size of the public sector and majority voting

Jens Peter Siebel

Volkswirtschaftliche Diskussionsbeiträge from Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht

Abstract: In this paper Tabellini’s and Alesina’s (1990) median voter model for the explanation of budget deficits is modified by endogenizing the private sector. Debt finance is supplemented by taxing a private consumption which serves as an additional source of revenue for funding the public sector. The introduction of the private sector enables us to explain the budget balance as a result of political polarization with a left-wing party and a right-wing party having different preferences for the size of the public sector.

Keywords: budget deficit; public debt; median voter (search for similar items in EconPapers)
JEL-codes: H61 H62 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2005-03
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Persistent link: https://EconPapers.repec.org/RePEc:sie:siegen:120-05

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