Arbeitspapier
A Simple Coase-Like Mechanism that Transfers Control of Government Spending Levels from Politicians to Voters
Elected representatives have little incentive to pursue the interests of those electing them once they are elected. This well-known principle-agent problem leads, in a variety of theories of government, to nonoptimally large levels of government expenditure. An implication is that budgetary rules are seen as necessary to constrain politicians? tax and spending behavior. Popular among such constraints are various Balanced Budget Amendment proposals. These approaches, however, are shown here to have serious limitations, including failure to address the central concern of spending level. An alternative approach is advanced here that relies on a Coase-like mechanism that transfers control of government spending to the voter. Prisoner's dilemma incentives and political competition are seen to be critical to the superiority of the present mechanism to approaches requiring budget balance.
- Sprache
-
Englisch
- Erschienen in
-
Series: Economics Discussion Papers ; No. 2007-12
- Klassifikation
-
Wirtschaft
National Budget; Budget Systems
National Deficit; Surplus
State and Local Budget and Expenditures
Structure, Scope, and Performance of Government
- Thema
-
political incentives
government spending
mechanism design
balanced budget amendments
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Graves, Philip E.
- Ereignis
-
Veröffentlichung
- (wer)
-
Kiel Institute for the World Economy (IfW)
- (wo)
-
Kiel
- (wann)
-
2007
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Graves, Philip E.
- Kiel Institute for the World Economy (IfW)
Entstanden
- 2007
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