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 (doi:10.1016/j.jce.2016.06.001)

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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
Research Areas: A. > Business School > Economics
Item ID: 19963
Useful Links:
Depositing User: Daryna Grechyna
Date Deposited: 06 Jun 2016 15:48
Last Modified: 03 Jun 2019 20:09
URI: https://eprints.mdx.ac.uk/id/eprint/19963

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