Federal Governments Should Subsidize State Expenditure that Voters do not Consider when Voting
نویسندگان
چکیده
This short paper analyzes whether a federal transfer system can be designed to increase welfare, when state governments create political budget cycles to increase the likelihood of reelection. The results show how the federal government may announce a transfer scheme in advance for the post-election year that counteracts the welfare costs of political budget cycles. JEL Classification: D61, D72, H71.
منابع مشابه
Federal Subsidization of State Expenditure to Reduce Political Budget Cycles
In this note we analyze whether a federal transfer system can be designed to increase welfare when state governments create political budget cycles. The results show how the federal government can counteract the welfare costs of these cycles, without hindering politicians from signaling their type, by announcing a transfer scheme to subsidize expenditures that voters do not consider when voting...
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