Majoritarian delays

Paulo Julio

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

Abstract: This paper illustrates how delayed debt stabilizations can arise in a society without any emerging conflict of interests among its members. We argue that, under a majority voting rule, the economy may generate excessive levels of government spending and larger debts over time,and that this delay is increasing in income inequality. The intuitionfor this result is simple: a majority of citizens may and in delaying stabilizations a way to increase government expenditures, transferring in this way resources from the richest to the poorest citizens in the economy. This process may explain the upward trend and the diffculty to reduce public expenditures, the so called ratchet effect.

Keywords: Stabilization delays; economic adjustments; economic reforms; majority voting (search for similar items in EconPapers)
JEL-codes: D72 E60 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2007
New Economics Papers: this item is included in nep-cdm and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:unl:unlfep:wp513

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