Sticky Spending, Sequestration, and Government Debt

• 成果类型: Article
• 署名作者: Piguillem, Facundo; Riboni, Alessandro
• 署名单位: Centre for Economic Policy Research - UK
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20210935
• 发表日期: 2024
• 页码: 3513-3550
• 关键词: dynamic theory; deficits; POLICY

摘要

Once established, government spending programs tend to continue. A commonly held view is that spending inertia leads to unsustainable debt, ultimately requiring fiscal adjustments such as sequestration. We show that by insuring against political turnover, inertia may reduce politicians' incentives to accumulate debt. However, large preexisting commitments and the prospect of future stabilization can lead to overspending to dilute past administrations' commitments. Finally, we show that political polarization amplifies incentives to prioritize inertial programs, potentially explaining the increased share of mandatory spending in the US budget. ( JEL D72, E62, H61, H63)