The Dynamics Of Government: A Positive Analysis
- Topics:
- Decision Support Systems
- Tags:
- Aggregation,
- Analysis,
- Finance,
- Government,
- Income,
- Operational Accounting,
- Redistribution,
- University Of Rochester,
- Voters
- Source:
- University of Rochester
FREE Registration is required
Overview: How does the size of the transfer system evolve in the short and in the long run? The authors modeled income redistribution as determined by voting among individuals of different types and income realizations. Taxation is distortionary because it discourages effort to accumulate human capital. Voters are fully rational, realizing that transfers have implications also for future economic decisions and taxation outcomes. In the economy, politically driven redistribution provides insurance, and the authors have investigated to what extent the democratic process provides it appropriately. Finally, it was found that the political mechanism is important: settings with smooth preference aggregation - it was analyzed that probabilistic voting here - produce less persistence and do not admit multiple expectational equilibria, which occur under majority-voting aggregation.
(Is this item miscategorized? Does it need more tags? Let us know.)
Format: PDF | Size: 507KB | Date: Jan 2003 | Pages: 39
