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Democratic public good provision

By John Hassler, Kjetil Storesletten and Fabrizio Zilibotti

Abstract

This paper analyzes 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 analyze 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

Topics: Key words, Markov equilibrium, multiple equilibria, public good, political economy, Ramsey allocation, redistribution, repeated voting, taxation
Year: 2007
OAI identifier: oai:CiteSeerX.psu:10.1.1.160.5493
Provided by: CiteSeerX
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