“The Political Economy of Fiscal Policy”
with S. Coate

Abstract

We describe a theory of the collective choice of fiscal policy in dynamic economies that are subject to aggregate shocks. The theory incorporates realistically complex policy spaces, rational forward looking agents, and a rich political decision process. We argue that it provides a tractable framework to study a variety of important questions in macroeconomics and public finance. 

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Slides presented at the 22nd Annual Meeting of the European Economic Association