A Positive Theory of Fiscal Deficits and Government Debt
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This paper considers an economy in which policymakers with different preferences alternate in office as a result of elections. Government debt is used strategically by each policymaker to influence the choices of his successors. If different policymakers disagree about the desired composition of government spending between two public goods, the economy exhibits a deficits bias; that is, debt accumulation is higher than it would be with a social planner. The equilibrium level of debt is larger the larger is the degree of polarization between alternating governments and the less likely it is that the current government will be re-elected.
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Patronage politics can have an intertemporal dimension, with the current government spending heavily on its favored group and passing on too little capital or too high levels of debt to the next government.
“This distortion can have an intertemporal dimension, with the current government spending heavily on its favored group and passing on too little capital (or too high levels of debt) to the next government (Alesina and Tabellini 1990;Alesina and Drazen 1991).”
From Using Natural Resources for Development: Why Has It Proven So Difficult? (2016) · cites this paper as Alesina and Tabellini 1990
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Research works printed but not linked: 18
- Alesina, Alberto (1986) "Credibility and Policy Convergence in a Two-Party System with Rational Voters" mimeo. ___________ (1987) "Macroeconomic Policy in a Two-Party System as a Repeated Game" Quarterly Journal of Economics, forthcoming.
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- Authors
- Alesina, A., & Tabellini, G.
- Affiliations
- Center for Economic and Policy Research (US)
- ORCID
- Tabellini, Guido
- Venue
- The Review of Economic Studies
- Publisher
- Oxford University Press (OUP)
- Published
- 1990-07
- Volume
- 57
- Issue
- 3
- Pages
- 403
- ISSN
- 0034-6527 (ISSN-L)
- OpenAlex
- W2249081876
- Cited by
- 1,568
- References
- 0
- Citations by year
- 2026: 55 · 2025: 64 · 2024: 82 · 2023: 51 · 2022: 70 · 2021: 82 · 2020: 59 · 2019: 66 · 2018: 57 · 2017: 64 · 2016: 63 · 2015: 61 · 2014: 66 · 2013: 56 · 2012: 59
- FWCI
- 31.67
- Type
- journal article
- Language
- en
- Open access
- green
- nrs.harvard.edu
- Licence
- cc-by
- Locations
- The Review of Economic Studies (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Digital Access to Scholarship at Harvard (DASH) (Harvard University) (submittedVersion, cc-by)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Fiscal Policies and Political Economy
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Fiscal Policy and Economic Growth
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Politics, Economics, and Education Policy
- Keywords
- budget deficit, public debt, political polarization, electoral incentives, public goods, political economy of fiscal policy
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