Politicians' coherence and government debt

Bellettini, Giorgio ; Roberti, Paolo (2016) Politicians' coherence and government debt. Bologna: Dipartimento di Scienze economiche DSE, p. 29. DOI 10.6092/unibo/amsacta/5456. In: Quaderni - Working Paper DSE (1087). ISSN 2282-6483.
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Abstract

We model a society that values the coherence between past policy platforms and current implemented policy, and where policy platforms partially commit candidates to their future actions. If an incumbent politician seeks to be reelected, she has to use her platforms to commit to moderate policies that can be distant from her most preferred one. Commitment is related to the incoherence cost that politicians pay when they renege on promised platforms. In this context, we suggest a novel mechanism through which issuing government debt can affect electoral results. Debt is exploited by an incumbent politician, who is in favor of low spending, to damage the credibility of her opponent's policy platforms, and be reelected. A higher level of debt decreases voters' most preferred level of spending, and makes the opponent's past platform a losing policy. Even if the latter chose to update her proposal, she would not be able to credibly commit to it, given the incoherence cost associated to changing proposals.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Bellettini, GiorgioUniversità di Bologna0000-0002-6768-9506
Roberti, PaoloUniversità di Bologna0000-0002-2577-0154
Keywords
voting, strategic debt, partial commitment
Subjects
ISSN
2282-6483
DOI
Deposit date
07 Dec 2016 09:49
Last modified
08 May 2017 14:32
URI

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