The Countercyclicity of Government Transfers: A Political Pressure Group Approach

David S. Bullock

Review of Agricultural Economics, 1994, vol. 16, issue 1, 93-102

Abstract: Farmers receive greater subsidies from the government during times of relatively unfavorable market conditions. A generalization of Becker's (1983) model is presented that offers an explanation of how political pressure groups respond to market forces. In the model, pressure groups compete for government transfers, but market conditions affect political agents' political expenditures. Political agents can be altruistic, taxpaying interest groups can perceive benefits (not just costs) of transfer programs, and subsidy-receiving interest groups can perceive costs (not just benefits) of transfer programs. The model offers a formal explanation of transfer countercyclical within the general framework of models of competition among political pressure groups.

Date: 1994
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