Political Disagreement, Lack of Commitment and the Level of Debt

Ricardo Nunes and Davide Debortoli

No 127, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: We analyze how public debt evolves when successive policymakers have different policy goals and cannot make credible commitments about their future policies. We consider several cases to be able to quantify the effects of imperfect commitment, political disagreement and political turnover. Imperfect commitment drives the long-run level of debt to zero. With political disagreement debt is a sizeable fraction of GDP. The frequency of political turnover does not produce quantitatively relevant effects. These results are consistent with and rationalize much of the existing empirical evidence. Finally, we find that political disagreement reduces the welfare gains of building commitment.

Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2011/paper_127.pdf (application/pdf)

Related works:
Working Paper: Political disagreement, lack of commitment and the level of debt (2008)
Working Paper: Political Disagreement, Lack of Commitment and the Level of Debt (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed011:127

Access Statistics for this paper

More papers in 2011 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().