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Abstract
This paper associates political instability to real shocks affecting the income of the median voter, in a two-period model where two political parties set redistribution in order to defend the interests of well-defined constituencies. Implemented policies affect future voting outcomes and an intertemporal trade-off arises for the parties since their optimal one-period strategy does not maximize the probability of being reelected. The higher the volatility of the real shock, the more likely that parties deviate from the optimal one-period strategy by choosing a conservative strategy, which increases their chances of reelection and the expected lifetime utility of their constituencies.
Abstract
This paper associates political instability to real shocks affecting the income of the median voter, in a two-period model where two political parties set redistribution in order to defend the interests of well-defined constituencies. Implemented policies affect future voting outcomes and an intertemporal trade-off arises for the parties since their optimal one-period strategy does not maximize the probability of being reelected. The higher the volatility of the real shock, the more likely that parties deviate from the optimal one-period strategy by choosing a conservative strategy, which increases their chances of reelection and the expected lifetime utility of their constituencies.
Document type
Monograph
(Working Paper)
Creators
Subjects
DOI
Deposit date
17 Jun 2004
Last modified
17 Feb 2016 14:05
URI
Other metadata
Document type
Monograph
(Working Paper)
Creators
Subjects
DOI
Deposit date
17 Jun 2004
Last modified
17 Feb 2016 14:05
URI
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