Government Policy with Time Inconsistent Voters

• 成果类型: Article
• 署名作者: Bisin, Alberto; Lizzeri, Alessandro; Yariv, Leeat
• 署名单位: New York University; California Institute of Technology
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20131306
• 发表日期: 2015
• 页码: 1711-1737
• 关键词: self-control; preference; HEALTH; discount; models; consumption; temptation; deficits; utility; WORLD

摘要

Behavioral economics presents a paternalistic rationale for benevolent government intervention. This paper presents a model of public debt where voters have self-control problems and attempt to commit using illiquid assets. In equilibrium, government accumulates debt to respond to individuals' desire to undo their commitments, which leads individuals to rebalance their portfolio, in turn feeding into a demand for further debt accumulation. As a consequence, (i) large (and distortionary) government debt accumulation occurs, and (ii) banning illiquid assets could improve individuals' welfare. These results offer a new rationale for balanced budget rules in constitutions to restrain governments' responses to voters' self-control problems.(JEL D2, D72, D78, H62, H63)