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American Economic Review: Vol. 97 No. 1 (March 2007)
AER Volume. 97, Issue 1 | 
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Inefficiency in Legislative Policymaking: A Dynamic Analysis
Article Citation
Battaglini, Marco, and
Stephen Coate. 2007. "Inefficiency in Legislative Policymaking: A Dynamic Analysis."
American Economic Review,
97(1): 118-149.
DOI: 10.1257/aer.97.1.118
DOI: 10.1257/aer.97.1.118
Abstract
This paper develops an infinite horizon model of public spending and taxation in
which policy decisions are determined by legislative bargaining. The policy space
incorporates both productive and distributive public spending and distortionary
taxation. The productive spending is investing in a public good that benefits all
citizens (e.g., national defense) and the distributive spending is district-specific
transfers (e.g., pork-barrel spending). Investment in the public good creates a
dynamic linkage across policymaking periods. The analysis explores the dynamics
of legislative policy choices, focusing on the efficiency of the steady-state level of
taxation and allocation of spending. (JEL D72, E62, H20, H50)
Article Full-Text Access
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Link to Appendix (236.11 KB)
Authors
Battaglini, Marco
Coate, Stephen
Coate, Stephen
