Public debt rule breaking by time-inconsistent voters

Government Policy with Time Inconsistent Voters

Behavioral economics presents a “paternalistic”rationale for benevolent government intervention. This paper presents a model of public debt where voters have self-control problems and attempt to commit by accumulating illiquid assets. We introduce politicians who may indulge/exploit voters’behavioral biases. Three main insights emerge: (i) Individuals’attempts to privately undo the consequences...

For Online Publication: Appendix for Government Policy with Time Inconsistent Voters

In this supplementary appendix, we study various extensions of the model in the paper. More specifically, in Section A we allow for election in the first period; in Section B we study the setting with arbitrary number of periods and convex distortions discussed in the body of the paper; in Section C we analyze a model analogous to the one presented in the paper in which agents are characterized...

Immigration, Public Pensions, and Heterogenous Voters Immigration, Public Pensions, and Heterogenous Voters

Depending on the design of the domestic pension system and the type of immigrants, voters will decide differently on immigration policy. In this paper, we investigate the voting outcome of three groups of heterogenous voters (skilled workers, unskilled workers, and retirees) under Beveridgian or Bismarckian pension systems which are either of the fixed contribution rate or the fixed replacement...

Analyzing the effects of income inequality on public debt in OPEC member states by threshold panel

Abstract One of the major problems of developing governments, such as those of OPEC member states, is the government deficit and rising public debt. One of the reasons for this public debt is government policies faced with income inequalities. The opposite side said that the increased income inequality can lead to capital accumulation and thus increase production and tax payments and reduce go...

Sustainability of Public Debt