scholarly journals Ideological polarization and government debt

2021 ◽  
Author(s):  
Mickael Melki ◽  
Andrew Pickering
Keyword(s):  
Public Good ◽  
Public Debt ◽  
Government Debt ◽  
Negative Association ◽  
Public Good Provision ◽  
Time Varying ◽  
Party Manifestos ◽  
Ideological Polarization ◽  
The Government ◽  
Good Provision

AbstractModels of strategic debt predict that public debt increases with polarization, measured by the ideological distance between the government and its likely successor. Conversely if voters are both short-termist and also more likely to switch their vote for parties offering higher spending and public good provision when the electorate is ideologically concentrated, then debt can fall with polarization, measured by dispersion of ideological preferences in the electorate. Using time-varying polarization measures generated from ideology data from party manifestos, we find a sizable and statistically significant negative association between debt levels in OECD countries and ideological polarization in the electorate.

What resource curse? The null effect of remittances on public good provision

2018 ◽  
Vol 30 (4) ◽  
pp. 431-450 ◽  
Author(s):  
Desiree A Desierto
Keyword(s):  
Public Goods ◽  
Public Good ◽  
Political Competition ◽  
Resource Curse ◽  
Public Good Provision ◽  
Formal Models ◽  
Null Effect ◽  
The Government ◽  
Good Provision

Existing formal models show that remittances generate a resource curse by allowing the government to appropriate its revenues toward rents, rather than public good provision. Households spend their remittance income on public-good substitutes, thereby alleviating the pressure on the government to provide public goods. However, the process by which the government survives the implicit threat of political challengers remains unspecified. By explicitly modeling political competition, I show that there is actually no resource curse from remittances. When there are challengers who can threaten to replace the incumbent leader, the best that any challenger can do is to offer not to take advantage of households’ provision of public-good substitutes, which induces the incumbent to try to match the offer. In equilibrium, public good provision is independent of remittances. This result holds even when no challenger can credibly commit to maintaining her offer once she is in power.

scholarly journals POLICY AND WELFARE EFFECTS OF WITHIN-PERIOD COMMITMENT

2014 ◽  
Vol 19 (7) ◽  
pp. 1401-1426 ◽  
Author(s):  
Fernando M. Martin
Keyword(s):  
Public Good ◽  
Public Good Provision ◽  
Tax Rates ◽  
Policy Choices ◽  
Current Period ◽  
Capital Depreciation ◽  
Factor Markets ◽  
The Government ◽  
Good Provision ◽  
Distortionary Taxes

Consider the problem of a benevolent government that needs to finance the provision of a public good with distortionary taxes and cannot commit to policies beyond the current period. In such a case, public expenditure is inefficiently low. If the government further loses the ability to set tax rates before production in the period takes place, then it will not internalize how its policy choices distort current factor markets. Thus, to counterbalance the costs of future distortions, it increases public good provision. For a calibrated economy, removing within-period commitment implies a welfare gain worth half a percent of yearly consumption. A similar gain can be obtained if instead, capital depreciation is allowed to be fully deducted from taxable income.

scholarly journals Social Pressure in Networks Induces Public Good Provision

Games ◽  
2021 ◽  
Vol 12 (1) ◽  
pp. 4
Author(s):  
David Jimenez-Gomez
Keyword(s):  
Public Good ◽  
Small Group ◽  
Dynamic Model ◽  
Network Topology ◽  
Social Pressure ◽  
Public Good Provision ◽  
Public Good Game ◽  
The Public ◽  
Best Response ◽  
Good Provision

I develop a dynamic model with forward looking agents, and show that social pressure is effective in generating provision in a public good game: after a small group of agents start contributing to the public good, other agents decide to contribute as well due to a fear of being punished, and this generates contagion in the network. In contrast to earlier models in the literature, contagion happens fast, as part of the best response of fully rational individuals. The network topology has implications for whether contagion starts and the extent to which it spreads. I find conditions under which an agent decides to be the first to contribute in order to generate contagion in the network, as well as conditions for contribution due to a self-fulfilling fear of social pressure.

scholarly journals The Evolution of Networks and Local Public Good Provision: A Potential Approach

Games ◽  
2021 ◽  
Vol 12 (3) ◽  
pp. 55
Author(s):  
Markus Kinateder ◽  
Luca Paolo Merlino
Keyword(s):  
Public Good ◽  
Nash Equilibria ◽  
Potential Game ◽  
Public Good Provision ◽  
Local Public Good ◽  
Steady State Distribution ◽  
State Distribution ◽  
Long Run ◽  
Split Graphs ◽  
Good Provision

In this paper, we propose a game in which each player decides with whom to establish a costly connection and how much local public good is provided when benefits are shared among neighbors. We show that, when agents are homogeneous, Nash equilibrium networks are nested split graphs. Additionally, we show that the game is a potential game, even when we introduce heterogeneity along several dimensions. Using this result, we introduce stochastic best reply dynamics and show that this admits a unique and stationary steady state distribution expressed in terms of the potential function of the game. Hence, even if the set of Nash equilibria is potentially very large, the long run predictions are sharp.

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