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The Political Economy of Unsustainable Fiscal Deficits

Roberto Pastén & James P. Cover

Latin American Journal of Economics2010https://doi.org/10.4067/s0717-68212010000200002article
ABDC C
Weight
0.42

What the paper says

This paper uses an intertemporal model of public finances to show that political instability can cause taxes to be tilted to the future, resulting in a fiscal deficit that is suboptimal and only weakly sustainable (in the sense of Quintos).This occurs because political instability gives the government an incentive to implement a myopic fiscal policy in order to increase its chances of remaining in office.The government achieves this by delaying taxes (or advancing spending) in order to buy political support, which in turn causes an upward trend in the deficit process and a financial crisis.Using annual data for Chile for the 1833-1999 period, we present statistical test results that support the model.

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https://doi.org/https://doi.org/10.4067/s0717-68212010000200002

Or copy a formatted citation

@article{roberto2010,
  title        = {{The Political Economy of Unsustainable Fiscal Deficits}},
  author       = {Roberto Pastén & James P. Cover},
  journal      = {Latin American Journal of Economics},
  year         = {2010},
  doi          = {https://doi.org/https://doi.org/10.4067/s0717-68212010000200002},
}

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The Political Economy of Unsustainable Fiscal Deficits

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Evidence weight

0.42

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.24 × 0.4 = 0.10
M · momentum0.64 × 0.15 = 0.10
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.