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Inefficiency in Legislative Policymaking: A Dynamic Analysis

Marco Battaglini () and Stephen Coate ()

American Economic Review, 2007, vol. 97, issue 1, 118-149

Abstract: This paper develops an infinite horizon model of public spending and taxation in which policy decisions are determined by legislative bargaining. The policy space incorporates both productive and distributive public spending and distortionary taxation. The productive spending is investing in a public good that benefits all citizens (e.g., national defense) and the distributive spending is district-specific transfers (e.g., pork-barrel spending). Investment in the public good creates a dynamic linkage across policymaking periods. The analysis explores the dynamics of legislative policy choices, focusing on the efficiency of the steady-state level of taxation and allocation of spending. (JEL D72, E62, H20, H50)

Date: 2007
Note: DOI: 10.1257/aer.97.1.118
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Related works:
Working Paper: Inefficiency in Legislative Policy-Making: A Dynamic Analysis (2005) Downloads
Working Paper: Inefficiency in Legislative Policy-Making: A Dynamic Analysis (2005) Downloads
Working Paper: Inefficiency in Legislative Policy-Making: A Dynamic Analysis (2005) Downloads
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