Rotten Parents and Disciplined Children: A Politico-Economic Theory of Public Expenditure and Debt
提出一个动态政治经济学理论，研究代际冲突如何通过选举影响债务、税收和公共支出，解释了年轻选民如何促进财政纪律。
This paper proposes a dynamic politico-economic theory of fiscal policy in a world comprising a set of small open economies, whose driving force is the intergenerational conflict over debt, taxes, and public goods. Subsequent generations of voters choose fiscal policy through repeated elections. The presence of young voters induces fiscal discipline, that is, low taxes and low debt accumulation. The paper characterizes the Markov-perfect equilibrium of the voting game in each economy, as well as the stationary equilibrium debt distribution and interest rate of the world economy. The equilibrium can reproduce some salient features of fiscal policy in modern economies.