Mandatory versus Discretionary Spending: The Status Quo Effect

• 成果类型: Article
• 署名作者: Bowen, T. Renee; Chen, Ying; Eraslan, Huelya
• 署名单位: Stanford University; Johns Hopkins University; Rice University
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.104.10.2941
• 发表日期: 2014
• 页码: 2941-2974
• 关键词: LEGISLATIVE POLICY-MAKING; collective goods; dynamic-analysis; provision; debt; INEFFICIENCY; INVESTMENT; compromise; PROGRAMS; POWER

摘要

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.