Quantifying the Impact of Political Frictions on Public Policy
Daryna Grechyna ()
MPRA Paper from University Library of Munich, Germany
This paper evaluates the impact of political frictions on fiscal policy in a sample of developed countries. We use a model of fiscal policy that features a lack of commitment by the government, political turnover, and another political friction which can be interpreted either as political polarization or as public rent-seeking. Political turnover increases public debt levels, while political polarization or public rent-seeking lead to higher public spending. We find that political frictions account for 67% of variation in government debt, 36% of variation in government spending, and 24% of variation in taxes in twenty two developed countries.
Keywords: fiscal policy; political turnover; political polarization; public rent-seeking. (search for similar items in EconPapers)
JEL-codes: E61 E62 H21 H63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-pbe and nep-pol
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https://mpra.ub.uni-muenchen.de/68918/11/MPRA_paper_68918.pdf revised version (application/pdf)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:65266
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