Sources of inefficiency in representative democracy: Evidence on public investments across nations

W. Crain

Economics of Governance, 2002, vol. 3, issue 2, 181 pages

Abstract: Besley and Coate (1997 and 1998) exposit a formal model of dynamic fiscal policy that highlights the problem associated with the temporal mismatch between the incidence of benefits and costs. Their analysis focuses in part on the conditions that may result in inefficient public investment decisions in a representative democracy. This paper employs cross-national data to investigate implications of the Besley-Coate model. The findings indicate that several political institutions significantly affect public investments, including term lengths, staggered term expiration dates, and the separation of power between the executive and legislative branches. The findings also suggest that fiscal arrangements for redistributive payments may increase public investments. Copyright Springer-Verlag Berlin Heidelberg 2002

Keywords: JEL classification: H1; H54; H87; Key words: political institutions; government investments; international fiscal issues (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:spr:ecogov:v:3:y:2002:i:2:p:171-181

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DOI: 10.1007/s101010100029

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