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Autoren: 
Bowen, T. Renee
Chen, Ying
Eraslan, Hülya
Datum: 
2012
Reihe/Nr.: 
Working Paper 603
Zusammenfassung: 
Do mandatory spending programs such as Medicare improve efficiency? We analyze a model with two parties allocating a fixed budget to a public good and private transfers each period over an infinite horizon. We compare two institutions that differ in whether public good spending is discretionary or mandatory. We model mandatory spending as an endogenous status quo since it is enacted by law and remains in effect until changed. Mandatory programs result in higher public good spending; furthermore, they ex ante Pareto dominate discretionary programs when parties are patient, persistence of power is low, and polarization is low.
Schlagwörter: 
budget negotiations
mandatory programs
dynamic bargaining
endogenous status quo
public goods
JEL: 
C73
D61
D78
Dokumentart: 
Working Paper

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