BARGAINING OVER TAXES AND ENTITLEMENTS IN THE ERA OF UNEQUAL GROWTH

• 成果类型: Article
• 署名作者: Azzimonti, Marina; Karpuska, Laura; Mihalache, Gabriel
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Richmond; Insper; University System of Ohio; Ohio State University
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12625
• 发表日期: 2023
• 页码: 893-941
• 关键词: POLITICAL-ECONOMY; positive theory; fiscal rules; MODEL; POLICY; debt

摘要

Entitlements have become an increasing component of total government spending in the United States over the last six decades. Using a political-economy model where parties bargain over taxes and entitlements, we argue that such dynamics can be explained by two factors: unequal growth, where top earners became richer while the income of the bottom 50% stagnated, and budget rules that provide bargaining power to low-income earners through a status quo effect. In a model calibrated to the United States, we show that sustained bargaining power by a party representing the poor results in a rising share of entitlements consistent with the data.