Discussion Paper Details

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Title: Democratic Public Good Provision

Author(s): John Hassler, Kjetil Storesletten and Fabrizio Zilibotti

Publication Date: September 2003

Keyword(s): markov equilibrium, multiple equilibria, political economy, public good, ramsey allocation and taxation

Programme Area(s): Public Economics

Abstract: This Paper analyses an overlapping generation model of public good provision under repeated voting. The public good is financed through age-dependent taxation that distorts human capital investment. Taxes redistribute income both across different skill groups and across generations. We contrast the political equilibria with the Ramsey allocation, and analyse the sources of inefficiency. The political equilibria can feature both under- and over-provision of public good, as well an inefficient life-cycle profile of taxes.

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Bibliographic Reference

Hassler, J, Storesletten, K and Zilibotti, F. 2003. 'Democratic Public Good Provision'. London, Centre for Economic Policy Research.