Politicians as experts, electoral control, and fiscal restraints

Dulleck, Uwe & Wigger, Berthold (2012) Politicians as experts, electoral control, and fiscal restraints. In Ulubasoglu, Mehmet & Kidd, Michael P. (Eds.) ESAM2012 Conference program, Econometric Society Australasia, Melbourne, VIC.

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Abstract

We establish an argument for fiscal restraints which is based on the idea that politicians are experts in the meaning of the credence good literature. A budget maximizing politician is better informed than the electorate about the necessary spending to ensure the states ability to provide services for the economy. Voters, being able to observe the budget but not the necessary level of spending, attenuate the government’s spending level via electoral control. A fiscal restraint limits the maximum spending a government will choose if the level of spending ensuring the politicians reelection is not sufficient to ensure the state’s ability to provide services to the economy. We determine when such a fiscal restraint improves voter welfare and discuss the role of the opposition in situations where very high levels of spending are required.

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ID Code: 55432
Item Type: Conference Paper
Refereed: Yes
Subjects: Australian and New Zealand Standard Research Classification > ECONOMICS (140000)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
Deposited On: 07 Dec 2012 03:50
Last Modified: 12 Jun 2013 15:21

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