Political frictions and public policy outcomes

Grechyna, Daryna (2016) Political frictions and public policy outcomes. Journal of Comparative Economics, 44 (3). pp. 484-495. ISSN 0147-5967

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Abstract

We study the role of political frictions in public policy outcomes. We propose a simple model of fiscal policy that combines a lack of commitment by the government, political turnover, and another political friction that can be interpreted either as political polarization or as public rent-seeking. We show that political turnover increases public debt levels, while political polarization or public rent-seeking leads to higher public spending. We evaluate the importance of different political frictions for fiscal policy outcomes using a sample of twenty developed countries. We find that the data on political instability combined with the data on public rent-seeking explain 25% of the variation in public debt levels.

Item Type: Article
Additional Information: Available online 6 June 2016
Keywords (uncontrolled): fiscal policy, political turnover, political polarization, public rent-seeking
Research Areas: A. > Business School > Economics
Item ID: 19963
Useful Links:
Depositing User: Daryna Grechyna
Date Deposited: 06 Jun 2016 15:48
Last Modified: 13 Oct 2016 14:40
URI: http://eprints.mdx.ac.uk/id/eprint/19963

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