Dynamic Bargaining over Redistribution in Legislatures
Facundo Piguillem () and
Alessandro Riboni ()
No 2016-15, Working Papers from Center for Research in Economics and Statistics
In modern democracies, public policies are negotiated by elected policymakers. When they agree to replace the current status quo, the approved policy becomes the status quo in the next period. Yet, these two ingredients, bargaining and endogenous status quo, are absent from most macroeconomic models. We revisit the classical capital taxation problem including both ingredients. We analyze a growth model where agents are heterogenous in wealth. We nd that legislators may avoid high taxes, because doing so may improve the bargaining power of \poorer" legislators in future negotiations. Equilibrium capital taxes are between 12% and 55%, depending on the calibration. We also nd that a status quo bias could lead to growth cycles: decades with low taxes and growing capital are fol lowed by decades with high taxes and decreasing capital (and vice versa).
Keywords: Redistribution; Time Consistency; Capital Taxes; Legislative Bargaining; Markovperfect Equilibria; Political Growth Cycles (search for similar items in EconPapers)
JEL-codes: E60 H00 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
http://crest.science/RePEc/wpstorage/2016-15.pdf Crest working paper version (application/pdf)
Working Paper: Dynamic Bargaining over Redistribution in Legislatures (2012)
Working Paper: Dynamic Bargaining over Redistribution in Legislatures (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:crs:wpaper:2016-15
Access Statistics for this paper
More papers in Working Papers from Center for Research in Economics and Statistics Contact information at EDIRC.
Bibliographic data for series maintained by Secretariat General () and Murielle Jules Maintainer-Email : murielle.jules@ensae.Fr.