American Economic Review Vol. 80 No. 1 1990
Voting on the Budget Deficit
Abstract
This paper analyzes a model in which a group of rational individuals votes over the composition and time profile of public spending. All voters agree that a balanced budget is ex ante optimal. However, if there is disagreement between current and future majorities, a balanced budget is not a political equilibrium under majority rule. Under certain conditions a majority of the voters favors a budget deficit, and the equilibrium deficit is larger the greater is the polarization among voters.
- Volume
- 80
- Issue
- 1
- Pages
- 37-49
- Sources
- bibtex:phds-export.bib