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On redistribution effects of public debt amongst single-minded generations

Emanuele Canegrati

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper I will introduce a new political economy model, where there exists a competition amongst two political candidates, which aim to set a policy which enables them to win elections, max- imising the probability of winning. I will show that, if taxes neces- sary to repay the debt are not lump sum but proportional to income, we have dramatic distorting effect on the labour supply. The prob- lem is exacerbate once we take into account that the Government set taxes in order to favour the most in‡uencing social group. As a consequence, effective marginal tax rates are differentiated amongst social groups and thus the burden of public debt is not equally borne.

Keywords: public debt; single-mindedness; intergenerational redistribution (search for similar items in EconPapers)
JEL-codes: D31 D63 D64 D71 D72 D78 H11 H21 H23 H55 H60 H63 J14 J18 J20 J22 J26 (search for similar items in EconPapers)
Date: 2007-03-14
New Economics Papers: this item is included in nep-cdm, nep-pbe and nep-pol
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