Hyperbolic Discounting and Politics: The beneficial effects of bureaucrats

Marcus Drometer ()

No 8, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: This paper introduces hyperbolic discounting into politics. In our model, politicians act according to the preferences of voters in order to be re-elected. As voters' preferences are dynamically inconsistent, the political process results in an allocation of the public budget that is distorted towards consumption ex- penditures. We show that this inefficiency is mitigated when the influence of bureaucrats who favour an excessive supply of public goods is taken into ac- count. Finally, we derive a positive relationship between the optimal level of a bureaucracy's influence and the relevance of long-term investments in a given policy area.

Keywords: Political Agency; Hyperbolic Discounting; Bureaucracy (search for similar items in EconPapers)
JEL-codes: D72 D73 H11 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2006-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:bav:wpaper:008_drometer

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