American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Inefficiency in Legislative Policymaking: A Dynamic Analysis
American Economic Review
vol. 97,
no. 1, March 2007
(pp. 118–149)
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)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.97.1.118Additional Materials
JEL Classification
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- E62 Fiscal Policy
- H20 Taxation, Subsidies, and Revenue: General
- H50 National Government Expenditures and Related Policies: General