Political Influence, Economic Interests and Endogenous Tax Structure in a Computable Equilibrium Framework: With Application to the United States, 1973 and 1983

43 Pages Posted: 5 Feb 2002 Last revised: 16 May 2019

See all articles by Louis Hotte

Louis Hotte

University of Ottawa

Stanley L. Winer

Carleton University - School of Public Policy and Administration; Carleton University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Abstract

A full understanding of public affairs requires the ability to distinguish between the policies that voters would like the government to adopt, and the influence that different voters or group of voters actually exert in the democratic process. We consider the properties of a computable equilibrium model of a competitive political economy in which the economic interests of groups of voters and their effective influence on equilibrium policy outcomes can be explicitely distinguished and computed. The model incorporates an amended version of the GEMTAP tax model, calibrated to data for the United States for 1973 and 1983. Emphasis is placed on how the aggregation of GEMTAP households into homogeneous groups affects the numerical representation of interests and influence for representative members of each group. Experiments with the model suggest that the changes in both interests and influence are important parts of the story behind the evolution of U.S. tax policy in the decade after 1973.

Keywords: Political competition, probabilistic voting, political influence, tax policy, public goods, GEMTAP, computable equilibrium

JEL Classification: D7, H20, H41, C68

Suggested Citation

Hotte, Louis and Winer, Stanley L., Political Influence, Economic Interests and Endogenous Tax Structure in a Computable Equilibrium Framework: With Application to the United States, 1973 and 1983. Public Choice, Vol. 109, 2001. Available at SSRN: https://ssrn.com/abstract=296634

Louis Hotte

University of Ottawa ( email )

Department of Economics
55 Laurier E.
Ottawa, Ontario K1N 6N5
Canada
+161 356 25800 1692 (Phone)
+161 356 25999 (Fax)

HOME PAGE: http://aix1.uottawa.ca/~lhott3/

Stanley L. Winer (Contact Author)

Carleton University - School of Public Policy and Administration ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S 5B6
Canada
613-520-2600 x2630 (Phone)
613-520-2551 (Fax)

HOME PAGE: http://www.carleton.ca/winer

Carleton University - Department of Economics ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S 5B6
Canada
613-520-2600 ex.2630 (Phone)
613-520-2551 (Fax)

HOME PAGE: http://www.carleton.ca/winer

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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