Arbeitspapier
Mandatory versus discretionary spending: The status quo effect
Do mandatory spending programs such as Medicare improve efficiency? We analyze a model with two parties allocating a fixed budget to a public good and private transfers each period over an infinite horizon. We compare two institutions that differ in whether public good spending is discretionary or mandatory. We model mandatory spending as an endogenous status quo since it is enacted by law and remains in effect until changed. Mandatory programs result in higher public good spending; furthermore, they ex ante Pareto dominate discretionary programs when parties are patient, persistence of power is low, and polarization is low.
- Language
-
Englisch
- Bibliographic citation
-
Series: Working Paper ; No. 603
- Classification
-
Wirtschaft
Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
Allocative Efficiency; Cost-Benefit Analysis
Positive Analysis of Policy Formulation and Implementation
- Subject
-
budget negotiations
mandatory programs
dynamic bargaining
endogenous status quo
public goods
Gesundheitsversorgung
Öffentliche Güter
Allokationseffizienz
Verhandlungstheorie
- Event
-
Geistige Schöpfung
- (who)
-
Bowen, T. Renee
Chen, Ying
Eraslan, Hülya
- Event
-
Veröffentlichung
- (who)
-
The Johns Hopkins University, Department of Economics
- (where)
-
Baltimore, MD
- (when)
-
2012
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Bowen, T. Renee
- Chen, Ying
- Eraslan, Hülya
- The Johns Hopkins University, Department of Economics
Time of origin
- 2012
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