The Political Economy of Fiscal Decisions: The Strategic Role of Public Debt (Contributions to Economics)

A ruling party decides each of two periods on the level of public goods which it finances by means of taxation and internal debt. The debt has to be honoured by the government of the second period. Between the two periods elections take place, which may change the ruling party. The book analyzes the fiscal decision of the first government which aims to maximize the long run utility of its representative voter. Conditions under which the government uses debt strategically in order to stay in power are identified. It is also shown how the fiscal decisions hinge on the populations' political structure and its beliefs about the future government. Front Matter....Pages i-xv Introduction....Pages 1-6 The Evolution of Public Debt....Pages 7-9 Literature Survey: The Political Economy of the Government Budget....Pages 11-48 Introduction to the Model....Pages 49-66 The Model....Pages 67-87 The Implications for Fiscal Policy....Pages 89-107 Conclusions....Pages 109-113 Back Matter....Pages 115-151 Recoge:Evolución de la deuda pública; Política económica del presupuesto gubernamental; Introducción al modelo; El modelo; Implicaciones en la política fiscal; Conclusiones