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Aggregation and Aggregation

Author

Listed:
  • Marina Azzimonti
  • Eva de Francisco
  • Per Krusell

Abstract

We discuss economic aggregation and political aggregation in the context of a simple dynamic version of the canonical political-economy model--the Meltzer-Richard model. Consumers differ both in labor productivity and initial asset wealth and there is no physical capital. Under commitment over future tax policy, and for economic preferences that imply aggregation in assets and productivity, the induced policy preferences for individuals do not depend on any distributional characteristics other than means. They imply time inconsistency, with taxes changing between the first and the second periods and staying constant thereafter. Political aggregation in the form of a median-voter theorem applies only in special cases. (JEL: D72, D78, E61, H23) (c) 2008 by the European Economic Association.

Suggested Citation

  • Marina Azzimonti & Eva de Francisco & Per Krusell, 2008. "Aggregation and Aggregation," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 381-394, 04-05.
    • Handle: RePEc:tpr:jeurec:v:6:y:2008:i:2-3:p:381-394
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    Citations

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    Cited by:

    1. Richard C. Barnett & Joydeep Bhattacharya & Helle Bunzel, 2014. "Voting For Income-Immiserizing Redistribution In The Meltzer–Richard Model," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 682-695, April.
    2. Bhandari, Anmol & Evans, David & Golosov, Mikhail & Sargent, Thomas J., 2017. "Public debt in economies with heterogeneous agents," Journal of Monetary Economics, Elsevier, vol. 91(C), pages 39-51.
    3. repec:hal:wpspec:info:hdl:2441/6bl2553ksc9vlq1fltjs9h1cht is not listed on IDEAS
    4. Facundo Piguillem & Anderson Schneider, 2013. "Heterogeneous Labor Skills, The Median Voter and Labor Taxes," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(2), pages 332-349, April.
    5. Barnett, Richard & Bhattacharya, Joydeep & Bunzel, Helle, 2012. "Voting for immiserizing income redistribution in the Meltzer-Richard model," School of Economics Working Paper Series 2012-15, LeBow College of Business, Drexel University.
    6. repec:spo:wpecon:info:hdl:2441/6bl2553ksc9vlq1fltjs9h1cht is not listed on IDEAS
    7. repec:hal:spmain:info:hdl:2441/6bl2553ksc9vlq1fltjs9h1cht is not listed on IDEAS
    8. repec:spo:wpmain:info:hdl:2441/6bl2553ksc9vlq1fltjs9h1cht is not listed on IDEAS
    9. Daniel R. Carroll, 2013. "The demand for income tax progressivity in the growth model," Working Papers (Old Series) 1106, Federal Reserve Bank of Cleveland.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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