Public Debt and the Political Economy of Reforms

Pierre Boyer, Brian Roberson and Christoph Esslinger

American Economic Journal: Microeconomics, 2024, vol. 16, issue 3, 459-91

Abstract: How do electoral incentives influence the choice to experiment with a policy reform that generates uncertain future benefits? To answer this question, we examine a two-period model of redistributive politics with uncertain policy outcomes involving a mixture of private and public benefits. In equilibrium, we find that the intertemporal trade-off between current policy costs and future benefits creates an incentive for politicians to use public debt to smooth spending across periods. The higher the share of policy benefits that are in the form of a public good, the higher the level of available debt-related spending on targeted policies that is necessary.

JEL-codes: D63 D72 E23 H41 H63 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Public debt and the political economy of reforms (2022)
Working Paper: Public Debt and the Political Economy of Reforms (2021)
Working Paper: Public debt and the political economy of reforms (2021)
Working Paper: Public debt and the political economy of reforms (2015)
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DOI: 10.1257/mic.20220238

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