DP4044 Democratic Public Good Provision
|Author(s):||John Hassler, Kjetil Storesletten, Fabrizio Zilibotti|
|Publication Date:||September 2003|
|Keyword(s):||markov equilibrium, multiple equilibria, political economy, public good, ramsey allocation, taxation|
|JEL(s):||D72, D78, E62, H21, H41, H53|
|Programme Areas:||Public Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=4044|
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.