Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71172
Authors: 
Passarelli, Francesco
Tabellini, Guido
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper: Fiscal Policy, Macroeconomics and Growth 4165
Abstract: 
This paper formulates a general theory of how political unrest influences public policy. Political unrest is motivated by emotions. Individuals engage in protests if they are aggrieved and feel that they have been treated unfairly. This reaction is predictable because individuals have a consistent view of what is fair. This framework yields novel insights about the sources of political influence of different groups in society. Even if the government is benevolent and all groups have access to the same technology for political participation, equilibrium policy can be distorted. Individuals form their view of what is fair taking into account the current state of the world. If fewer aggregate resources are available, individuals accept a lower level of welfare. This resignation effect in turn induces a benevolent government to procrastinate unpleasant policy choices.
Subjects: 
emotions
political economics
unrest
riots
fairness
public debt
procrastination
JEL: 
H00
Document Type: 
Working Paper

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