Public Choice

, Volume 148, Issue 1–2, pp 149–161 | Cite as

Elections and the strategic use of budget deficits

Article

Abstract

We present a model in which a conservative incumbent with preferences for low public spending can strategically run a budget deficit to prevent the left-wing opposition candidate from choosing high public spending if elected, and possibly also to ensure his own reelection. We find that the incumbent never manipulates the opposition candidate’s public spending if he can ensure his own reelection; and that a conservative incumbent who runs a budget deficit to ensure his reelection may somewhat paradoxically choose high public spending before the election.

Keywords

Voting Budget deficits Public debt Distortionary policies 

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Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Study Center GerzenseeGerzenseeSwitzerland
  2. 2.Department of EconomicsUniversity of MelbourneMelbourneAustralia

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