Government Size, the Role of Commitments

• Autores: Giuseppe Albanese, Salvatore Modica
• Localización: Oxford bulletin of economics and statistics, ISSN 0305-9049, Vol. 74, Nº. 4, 2012, págs. 532-546
• Idioma: inglés
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• Resumen

  • We explore the hypothesis that long-term commitments affect the dynamics of government expenditure. With the aid of a simple median-voter model we interpret the pattern of increasing-then-constant tax rates observed in OECD countries in the second half of the last century: persistence of public expenditure and a lower bound on new interventions will push government size upward, and preferences of the electorate put a halt to this growth at some point. In this view, the fiscal policy variable is seen to consist of only a part of the total expenditure, the rest being predetermined by its past level.