Metadata only
Datum
2023-03Typ
- Journal Article
ETH Bibliographie
yes
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Abstract
We model the political manipulation of deficits in a political budget cycle model. Assuming that a share of voters suffers from debt illusion the incumbent can increase her re-election chances by expanding government spending. However, the optimal manipulation may exceed the amount necessary to maximize re-election chances (over-manipulation) if the deficit is not very costly (low repayment obligation). Then, more selfish politicians (higher ego rents and, therefore, increased re-election motivation) reduce the over-manipulation. Conversely, “excessive” spending may wrongly be interpreted as opportunistic government manipulation. Theoretical results are supported empirically, with very robust evidence in a sample of 87 democracies. Mehr anzeigen
Publikationsstatus
publishedExterne Links
Zeitschrift / Serie
European Journal of Political EconomyBand
Seiten / Artikelnummer
Verlag
ElsevierThema
Political budget cycles; Debt illusion; Ego rent; Deficit; Fiscal policy; Political economyETH Bibliographie
yes
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