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http://dspace.mediu.edu.my:8181/xmlui/handle/10419/17935| Title: | A Simple Coase-Like Mechanism that Transfers Control of Government Spending Levels from Politicians to Voters |
| Keywords: | H61 H62 H72 H11 ddc:330 political incentives government spending mechanism design balanced budget amendments |
| Issue Date: | 16-Oct-2013 |
| Publisher: | Kiel Institute for the World Economy (IfW) Kiel |
| Description: | Elected representatives have little incentive to pursue the interests of those electing them once they are elected. This well-known principle-agent problem leads, in a variety of theories of government, to nonoptimally large levels of government expenditure. An implication is that budgetary rules are seen as necessary to constrain politicians? tax and spending behavior. Popular among such constraints are various Balanced Budget Amendment proposals. These approaches, however, are shown here to have serious limitations, including failure to address the central concern of spending level. An alternative approach is advanced here that relies on a Coase-like mechanism that transfers control of government spending to the voter. Prisoner's dilemma incentives and political competition are seen to be critical to the superiority of the present mechanism to approaches requiring budget balance. |
| URI: | http://koha.mediu.edu.my:8181/xmlui/handle/10419/17935 |
| Other Identifiers: | http://hdl.handle.net/10419/17935 ppn:558073867 RePEc:zbw:ifwedp:5526 |
| Appears in Collections: | EconStor |
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