Format du dépôt |
Fichier |
Type de dépôt |
Pré-publication, Document de travail |
Titre |
en
Engineering Crises: Favoritism and Strategic Fiscal Indiscipline
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Résumé |
en
If people understand that some macroeconomic policies are unsustainable, why would they vote for them in the .first place? We develop a political economy theory of the endogenous emergence of fiscal crises, based on the idea that the adjustment mechanism to a crisis favors some social groups, that may be induced ex-ante to vote in favor of policies that are more likely to lead to a crisis. People are entitled to a certain level of a publicly provided good, which may be rationed in times of crises. After voting on that level, society votes on the extend to which it will be financed by debt. Under bad enough macro shocks, a crisis arises: taxes are set at their maximum but despite that some agents do not get their entitlement. Some social groups do better in this rationing process than others. We show that public debt .which makes crises more likely .is higher, as is the probability of a crisis, the greater the level of favoritism. If the favored group is important enough to be pivotal when society votes on the entitlement level, favoritism also leads to greater public expenditure. We show that the favored group may strategically favor a weaker state in order to make crises more frequent. Finally, the decisive voter when choosing expenditure may be different from the one when voting on debt. In such a case, constitutional limits on debt may raise the utility of all the poor, relative to the equilibrium outcome absent such limits.
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Auteur(s)
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Gilles Saint-Paul
1, 2, 3
, Davide Ticchi
4
, Andrea Vindigni
5
1
PJSE -
Paris Jourdan Sciences Economiques
( 1171428 )
- 48 boulevard Jourdan 75014 Paris
- France
-
Université Paris 1 Panthéon-Sorbonne UMR8545 ( 7550 )
;
-
École normale supérieure - Paris ( 59704 )
;
-
Université Paris Sciences et Lettres ( 564132 )
;
-
Institut National de la Recherche Agronomique UMR1393 ( 92114 )
;
-
École des hautes études en sciences sociales ( 99539 )
;
-
École des Ponts ParisTech ( 301545 )
;
-
Centre National de la Recherche Scientifique ( 441569 )
2
PSE -
Paris School of Economics
( 301309 )
- 48 boulevard Jourdan 75014 Paris
- France
-
Université Paris 1 Panthéon-Sorbonne ( 7550 )
;
-
École normale supérieure - Paris ( 59704 )
;
-
Université Paris Sciences et Lettres ( 564132 )
;
-
École des hautes études en sciences sociales ( 99539 )
;
-
École des Ponts ParisTech ( 301545 )
;
-
Centre National de la Recherche Scientifique ( 441569 )
;
-
Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement ( 577435 )
3
New York University [Abu Dhabi]
( 266683 )
- PO Box 129188, Abu Dhabi, United Arab Emirates
- Émirats arabes unis
4
Marche Polytechnic University
( 349309 )
-
- France
5
UniGe -
Università degli studi di Genova = University of Genoa
( 302889 )
- Via Balbi, 5 - 16126 Genova
- Italie
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Langue du document |
Anglais
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Date de production/écriture |
2017-09
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Domaine(s) |
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Sciences de l'Homme et Société/Economies et finances
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Mots-clés (JEL) |
-
E - Macroeconomics and Monetary Economics/E.E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook/E.E6.E62 - Fiscal Policy
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F - International Economics/F.F3 - International Finance/F.F3.F34 - International Lending and Debt Problems
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H - Public Economics/H.H6 - National Budget, Deficit, and Debt
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O - Economic Development, Innovation, Technological Change, and Growth/O.O1 - Economic Development/O.O1.O11 - Macroeconomic Analyses of Economic Development
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P - Economic Systems/P.P1 - Capitalist Systems/P.P1.P16 - Political Economy
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Référence interne |
-
PSE Working Papers n°2017-40
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Mots-clés |
en
Political Economy, Fiscal Crises, Favoritism, Entitlements, Public Debt, In- equality, State Capacity
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