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Majoritarian delays

Author

Listed:
  • Paulo Julio

Abstract

This paper illustrates how delayed debt stabilizations can arise in a society without any emerging conflict of interests among its members. We argue that, under a majority voting rule, the economy may generate excessive levels of government spending and larger debts over time,and that this delay is increasing in income inequality. The intuitionfor this result is simple: a majority of citizens may and in delaying stabilizations a way to increase government expenditures, transferring in this way resources from the richest to the poorest citizens in the economy. This process may explain the upward trend and the diffculty to reduce public expenditures, the so called ratchet effect.

Suggested Citation

  • Paulo Julio, 2007. "Majoritarian delays," Nova SBE Working Paper Series wp513, Universidade Nova de Lisboa, Nova School of Business and Economics.
    • Handle: RePEc:unl:unlfep:wp513
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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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