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Article dans une revue Economics and Politics Année : 2021

Engineering crises: Favoritism and strategic fiscal indiscipline

Résumé

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 for fiscal policies that are more likely to lead to a crisis. Greater levels of favoritism lead to a higher public debt and more frequent crises, as well as to higher public expenditure, if the favored group is large enough. We provide conditions under which the favored group strategically favors a weaker state's fiscal capacity and when constitutional limits on debt raise the utility of all poor.
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Dates et versions

halshs-03324854, version 1 (24-08-2021)

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Gilles Saint-Paul, Davide Ticchi, Andrea Vindigni. Engineering crises: Favoritism and strategic fiscal indiscipline. Economics and Politics, 2021, 33 (3), pp.583-610. ⟨10.1111/ecpo.12175⟩. ⟨halshs-03324854⟩
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