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Starving the Beast? Intra-Generational Conflict and Balanced Budget Rules

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Abstract

A balanced budget requirement does not only prevent fiscal policy makers from smoothing tax distortions but also affects their preferred choice of government spending. The paper analyzes the conditions under which groups opposed to government spending might want to implement a balanced budget requirement in order to induce the government to spend less. It shows that relaxing a balanced budget requirement need not be associated with higher government spending.

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  • Dirk Niepelt, 2005. "Starving the Beast? Intra-Generational Conflict and Balanced Budget Rules," Working Papers 05.04, Swiss National Bank, Study Center Gerzensee.
    • Handle: RePEc:szg:worpap:0504
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    1. Sergey Zhavoronkov & Konstantin Yanovskiy & Kirill Rodionov, 2015. "Political Factors of the Cuts and Surges in Government Spending: The Effects on Old Market Democracies and Post-Communist Countries," Working Papers 146, Gaidar Institute for Economic Policy, revised 2015.

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