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Hyperbolic Discounting and Politics: The beneficial effects of bureaucrats

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  • Marcus Drometer

Abstract

This paper introduces hyperbolic discounting into politics. In our model, politicians act according to the preferences of voters in order to be re-elected. As voters' preferences are dynamically inconsistent, the political process results in an allocation of the public budget that is distorted towards consumption ex- penditures. We show that this inefficiency is mitigated when the influence of bureaucrats who favour an excessive supply of public goods is taken into ac- count. Finally, we derive a positive relationship between the optimal level of a bureaucracy's influence and the relevance of long-term investments in a given policy area.

Suggested Citation

  • Marcus Drometer, 2006. "Hyperbolic Discounting and Politics: The beneficial effects of bureaucrats," Working Papers 008, Bavarian Graduate Program in Economics (BGPE).
    • Handle: RePEc:bav:wpaper:008_drometer
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    References listed on IDEAS

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    Cited by:

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    2. Emilio Ocampo, 2019. "The Economic Analysis of Populism. A Selective Review of the Literature," CEMA Working Papers: Serie Documentos de Trabajo. 694, Universidad del CEMA.

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    More about this item

    Keywords

    Political Agency; Hyperbolic Discounting; Bureaucracy;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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