A Model of Endogenous Fiscal Deficits and Delayed Fiscal Reforms

Andres Velasco

This paper develops a political-economic model of fiscal policy one in which" government resources are a common property' out of which interest groups can finance" expenditures on their preferred items. This setup has striking macroeconomic implications. " First, fiscal deficits and debt accumulation occur even when there are no reasons for intertemporal smoothing. Second deficits can be eliminated through a fiscal reform, but such a reform may only take place after a" delay during which government debt is built up

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Year of publication:	December 1997
Authors:	Velasco, Andres
Institutions:	National Bureau of Economic Research (contributor)
Publisher:	Cambridge, Mass : National Bureau of Economic Research
Subject:	Finanzreform \| Fiscal reform \| Theorie \| Theory \| Finanzpolitik \| Fiscal policy \| Öffentliche Schulden \| Public debt \| Neue politische Ökonomie \| Public choice \| Interessenpolitik \| Lobbying \| Haushaltsdefizit \| Budget deficit

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