Imperfect information and the Meltzer-Richard hypothesis

Christian Bredemeier

Public Choice, 2014, vol. 159, issue 3, 576 pages

Abstract: Standard majority-voting models predict that redistribution is positively linked to the mean-to-median income ratio but empirical evidence is mixed. This paper shows that the different empirical reactions to rising mean-to-median income ratios can be rationalized in a simple Romer-Roberts-Meltzer-Richard framework with imperfect information. In such a model, it is important to consider the source of rising mean-to-median ratios. Income growth of the poor can lead to less redistribution as more agents perceive themselves to be rich, which tends to reduce the support for redistribution. An empirical application reveals that the model can explain a substantial part of the first Reagan tax cut. Copyright Springer Science+Business Media New York 2014

Keywords: Voting; Redistribution; Imperfect information; D72; H24; D83 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://hdl.handle.net/10.1007/s11127-013-0072-z (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:pubcho:v:159:y:2014:i:3:p:561-576

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11127/PS2

DOI: 10.1007/s11127-013-0072-z

Access Statistics for this article

Public Choice is currently edited by WIlliam F. Shughart II

More articles in Public Choice from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().