Elections and the Strategic Use of Budget Deficits

Roland Hodler

No 1074, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: We present a model in which a conservative incumbent with preferences for low public spending can strategically run a budget deficit to prevent the left-wing opposition candidate from choosing high public spending if elected, and possibly also to ensure his own reelection. We find that the incumbent never manipulates the opposition candidate’s public spending if he can ensure his reelection; and that a conservative incumbent who runs a budget deficit to ensure his reelection may somewhat paradoxically choose high public spending before the election.

Keywords: Voting; Budget deficits; Public Debt; Political Economics (search for similar items in EconPapers)
JEL-codes: C72 D72 H62 H63 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2009
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Journal Article: Elections and the strategic use of budget deficits (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:mlb:wpaper:1074

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