Electoral Competition and Policy Feedback Effects

33 Pages Posted: 23 Mar 2012 Last revised: 18 Mar 2016

See all articles by Carlo Prato

Carlo Prato

Columbia University - Department of Political Science

Date Written: March 17, 2016


Many government policies systematically influence citizens' acquisition of economic information. Since voters evaluate policy platforms in light of this information, these policy feedback effects can affect voters' long term policy preferences. We illustrate this logic in the context of government subsidies to property ownership. Using an extension of the Romer-Meltzer-Richard model with imperfect information about the economy, we show how subsidies to ownership of real estate -- such as mortgage interest deductions or discounted sales of public housing -- produce an electorate that is systematically less favorable to redistributive taxation. The resulting political complementarity between home subsidy and fiscal conservatism is consistent with several empirical regularities.

Keywords: Property Ownership, Policy Feedback Effects, Redistribution

JEL Classification: H00, D72, D78

Suggested Citation

Prato, Carlo, Electoral Competition and Policy Feedback Effects (March 17, 2016). Available at SSRN: https://ssrn.com/abstract=2027499 or http://dx.doi.org/10.2139/ssrn.2027499

Carlo Prato (Contact Author)

Columbia University - Department of Political Science ( email )

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