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Public Debt Stabilization: Redistributive Delays Versus Preemptive Anticipations

Author

Listed:
  • Paulo Júlio

    (Gabinete de Estratégia e Estudos, Portuguese Ministry of Economy and Employment)

Abstract

This article illustrates and formalizes the conditions under which majority voting can lead to either delays or anticipations in public debt stabilizations. Under the assumptions of proportional taxation and universal public expenditures, we present an intertemporal version of the “Meltzer-Richard” result, which captures the difficulty of controlling increases in public expenditures. In the benchmark model delays are endogenous and have redistributive effects, but when a relatively rich minority makes the decisions, we may observe anticipation in public debt stabilization.

Suggested Citation

  • Paulo Júlio, 2011. "Public Debt Stabilization: Redistributive Delays Versus Preemptive Anticipations," GEE Papers 0045, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Dec 2011.
    • Handle: RePEc:mde:wpaper:0045
    as

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    File URL: https://www.gee.gov.pt/RePEc/WorkingPapers/GEE_PAPERS_45.pdf
    File Function: First version, 2011
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Stabilization delays; Economic adjustments; Economic reforms; Majority voting;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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