Growth of Government and the Politics of Fiscal Policy

摘要: Abstract US government expenditures increased rapidly during the post-war period, then slowed in 1980s and began falling 1992. To examine dynamics of growth subsequent reduction spending, we present a general equilibrium model which politicians chose spending to maximize support by their constituents. That is, output are endogenous jointly determined. The predicts that will initially mimic Wagner's law—the tendency for increase with GDP—but eventually diverge from due welfare state. After become large, identify an threshold on economy's path where it is optimal shrink state, cut taxes, stimulate growth. We show policies chosen Pareto suboptimal cause cycles output. Such several types, characterize when result size as well state between small large.