Precommitted Government Spending and Partisan Politics
CESifo, Munich, 2011
CESifo Working Paper No. 3462
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This paper analyzes government commitments to ongoing spending programs that require future outlays. Spending commitments are important for understanding partisan politics because they constrain future governments. In a model with one government good, a “stubborn liberal” policy maker can use precommitted spending to prevent a later conservative government from imposing decisive spending cuts. In a model where parties differ about spending priorities, reelection uncertainty creates a permanent bias towards higher government spending and higher taxes.
Public Finance
Public Choice