Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition

Timothy Besley and Anne Case

American Economic Review, 1995, vol. 85, issue 1, 25-45

Abstract: This paper develops a model of the political economy of tax-setting in a multijurisdictional world where voters' choices and incumbent behavior are determined simultaneously. Voters are assumed to make comparisons between jurisdictions to overcome political agency problems. This forces incumbents into a (yardstick) competition in which they care about what other incumbents are doing. The authors provide a theoretical framework and empirical evidence using U.S. state data from 1960 to 1988. The results are encouraging to the view that vote-seeking and tax-setting are tied together through the nexus of yardstick competition. Copyright 1995 by American Economic Association.

Date: 1995
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Working Paper: Incumbent Behavior: Vote Seeking, Tax Setting and Yardstick Competition (1992)
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