Expert Politicians, Electoral Control, and Fiscal Restraints

Uwe Dulleck and Berthold Wigger ()

No 79, NCER Working Paper Series from National Centre for Econometric Research

Abstract: Fiscal restraints have been argued to force today's governments to internalize the externalities that result from extensive borrowing on future electorates and governments as well as on other countries by causing fiscal instability. In this article we provide an alternative argument for fiscal restraints which is based on an agency perspective on government. A budget maximizing politician is better informed than the electorate about the necessary spending to ensure the states ability to provide services for the economy. In this respect, the politician is an expert in the meaning of the credence good literature. The electorate, being able to observe the budget but not the necessary level of spending, will reelect a government if its budget does not exceed a critical level. A fiscal restraint limits the maximum spending a government will choose if the reelection level is not sufficient to ensure the state's ability to provide services to the economy. We determine when such a fiscal restraint improves voter welfare and discuss the role of the opposition in situations where very high levels of spending are required.

Keywords: Electoral control; Fiscal restraints; Credence goods (search for similar items in EconPapers)
JEL-codes: D82 H50 H61 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2012-02-13
New Economics Papers: this item is included in nep-cdm and nep-pol
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.ncer.edu.au/papers/documents/WP79a.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.ncer.edu.au:443 (Bad file descriptor) (http://www.ncer.edu.au/papers/documents/WP79a.pdf [302 Moved Temporarily]--> https://www.ncer.edu.au/papers/documents/WP79a.pdf)

Related works:
Working Paper: Expert Politicians, Electoral Control, and Fiscal Restraints (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:qut:auncer:2012_2

Access Statistics for this paper

More papers in NCER Working Paper Series from National Centre for Econometric Research Contact information at EDIRC.
Bibliographic data for series maintained by School of Economics and Finance ( this e-mail address is bad, please contact ).