Policy Myopia and Economic Growth
31 Pages Posted: 12 Aug 2005
Date Written: August 2005
Abstract
We develop a theory of second best policy myopia. Policy myopia arises when rational voters allow politicians to bias public investments towards short-term investments. We demonstrate that policy myopia is not an inevitable implication of the fact that voters cannot observe immediately how much their politicians invest in certain types of public goods; rather it is the interaction between observation lags, economic growth and binding revenue constraints that forces rational voters to accept a short-term bias. We argue that growth in government and policy myopia are related social phenomena. The analysis is motivated by stylized facts about public spending patterns.
Keywords: Myopia, growth, public goods, electoral accountability
JEL Classification: D72, D82
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Political Economics and Macroeconomic Policy
By Torsten Persson and Guido Tabellini
-
Political Economics and Macroeconomic Policy
By Torsten Persson and Guido Tabellini
-
Who is Afraid of Political Instability?
By Nauro F. Campos and Jeffrey B. Nugent
-
External Debt and Political Instability
By Sule Ozler and Guido Tabellini
-
By Nauro F. Campos and Jeffrey B. Nugent
-
Elections, Fiscal Policy and Growth: Revisiting the Mechanism
-
Political Uncertainity, Public Expenditure and Growth
By Anton Muscatelli, Julia Darby, ...