Politicians as experts, electoral control, and fiscal restraints

Uwe Dulleck, Berthold U. Wigger

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)

Abstract

We propose an argument for fiscal restraints that is based on the premise that the services of politicians are credence goods. Politicians are experts who specialize in observing the true state of the economy. Budget maximizing politicians are better informed than the electorate about the level of public spending necessary to manage public affairs. Voters, who are able to observe the size of the budget but not the necessary level of spending, affect the government's spending behavior via electoral control. A fiscal restraint limits the maximum spending a government can choose. We identify conditions under which such a fiscal restraint improves voter welfare and discuss the role of the political opposition as a second expert in situations in which the state of the economy requires a level of spending which exceeds the fiscal restraint.

Original languageEnglish
Pages (from-to)106-116
Number of pages11
JournalJournal of Public Economics
Volume121
DOIs
Publication statusPublished - 1 Feb 2015
Externally publishedYes

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