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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/26213
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| Title: | | Habit formation, strategic extremism and debt policy  |
| Authors: | | Matsen, Egil Thøgersen, Øystein |
| Issue Date: | | 2007 |
| Series/Report no.: | | CESifo working paper 2169 |
| Abstract: | | We suggest a probabilistic voting model where voters preferences for alternative public goods display habit formation. Current policies determine habit levels and in turn the future preferences of the voters. This allows the incumbent to act strategically in order to influence the probability of re-election. Comparing to a benchmark case of a certain re-election, we demonstrate that the incumbents optimal policy features both a more polarized allocation between the alternative public goods and a debt bias. |
| Subjects: | | budget deficits voting extremism habit formation |
| JEL: | | D72 D78 H62 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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