Affordable Access

Fiscal Policy, Public Debt Stabilzation and Politics: Theory and evidence from the US and UK.

Authors
Disciplines
  • Economics
  • Political Science

Abstract

This paper presents a two-party model of fiscal and debt policy which; (i) explicitly models the partisan, stabilisation, and (to some extent) survival motives of politicians; (ii) has predictions that are largely consistent with existing empirical finding about partisan and electoral effects in government expenditure, tax revenue, and debt; (iii) yields new predictions about how the feedback of fiscal policy on lagged debt may depend on partisan and electoral effects. These new predictions are not rejected by a test of the model on US and UK data.

There are no comments yet on this publication. Be the first to share your thoughts.