IDEAS home Printed from https://ideas.repec.org/p/eve/wpaper/01-06.html
   My bibliography  Save this paper

Time Consistency and Dynamic Democracy

Author

Listed:
  • Toke Aidt

    (Faculty of Economics and Politics, University of Cambridge)

  • Francesco Magris

    (EPEE, Université d'Evry-Val d'Essonne)

Abstract

This paper analyses how democratic institutions can help mitigate time inconsistency problems. We illustrate the ideas in a simple model of capital taxation. Voters delegate policy decisions to a politician and employ a retrospective voting rule to hold the elected politician accountable for its policy actions while in office. We show that non-expropriating tax policies can be sustained in Markov Perfect Equilibrium. If voters elect politicians that care enough about power or if they are willing to pay politicians a sufficiently high wage, capital is not expropriated in equilibrium.

Suggested Citation

  • Toke Aidt & Francesco Magris, 2001. "Time Consistency and Dynamic Democracy," Documents de recherche 01-06, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    • Handle: RePEc:eve:wpaper:01-06
    as

    Download full text from publisher

    File URL: https://www.univ-evry.fr/fileadmin/mediatheque/ueve-institutionnel/03_Recherche/laboratoires/Epee/wp/01-06.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Performance voting; capital taxation; time consistency;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eve:wpaper:01-06. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Samuel Nosel (email available below). General contact details of provider: https://edirc.repec.org/data/epevrfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.