Political Power and the Credibility of Government Debt

Avinash Dixit; John Londregan

doi:10.1006/jeth.2000.2684

Political Power and the Credibility of Government Debt

Avinash Dixit
, John Londregan

Research output: Contribution to journal › Article › peer-review

32 Scopus citations

Abstract

If political power and motives to invest in government bonds are positively correlated across voting groups, then a self-selection equilibrium can arise where the government's promise to repay its debt is credible. We illustrate this using a formal model where the alternative use of wealth is to acquire human capital. Journal of Economic Literature Classification Numbers: D72, E60, H63.

Original language	English (US)
Pages (from-to)	80-105
Number of pages	26
Journal	Journal of Economic Theory
Volume	94
Issue number	1
DOIs	https://doi.org/10.1006/jeth.2000.2684
State	Published - Sep 2000
Externally published	Yes

All Science Journal Classification (ASJC) codes

Economics and Econometrics

Access to Document

10.1006/jeth.2000.2684

Cite this

@article{dbbe278a99a8482d8aa78122842615e8,

title = "Political Power and the Credibility of Government Debt",

abstract = "If political power and motives to invest in government bonds are positively correlated across voting groups, then a self-selection equilibrium can arise where the government's promise to repay its debt is credible. We illustrate this using a formal model where the alternative use of wealth is to acquire human capital. Journal of Economic Literature Classification Numbers: D72, E60, H63.",

author = "Avinash Dixit and John Londregan",

note = "Funding Information: 1We thank Rod Kiewiet and Torsten Persson for useful discussions, the referee for constructive suggestions, and the National Science Foundation for financial support. We are indebted to seminar participants at the University of Minnesota, especially V. V. Chari, Andrew Atkeson, and Beth Allen, for suggestions that led to substantial improvements in the model. Some of this work was done while Dixit was visiting the Institute for International Economic Studies, Stockholm, and he thanks its faculty and staff for their hospitality.",

year = "2000",

month = sep,

doi = "10.1006/jeth.2000.2684",

language = "English (US)",

volume = "94",

pages = "80--105",

journal = "Journal of Economic Theory",

issn = "0022-0531",

publisher = "Academic Press Inc.",

number = "1",

}

TY - JOUR

T1 - Political Power and the Credibility of Government Debt

AU - Dixit, Avinash

AU - Londregan, John

N1 - Funding Information: 1We thank Rod Kiewiet and Torsten Persson for useful discussions, the referee for constructive suggestions, and the National Science Foundation for financial support. We are indebted to seminar participants at the University of Minnesota, especially V. V. Chari, Andrew Atkeson, and Beth Allen, for suggestions that led to substantial improvements in the model. Some of this work was done while Dixit was visiting the Institute for International Economic Studies, Stockholm, and he thanks its faculty and staff for their hospitality.

PY - 2000/9

Y1 - 2000/9

N2 - If political power and motives to invest in government bonds are positively correlated across voting groups, then a self-selection equilibrium can arise where the government's promise to repay its debt is credible. We illustrate this using a formal model where the alternative use of wealth is to acquire human capital. Journal of Economic Literature Classification Numbers: D72, E60, H63.

AB - If political power and motives to invest in government bonds are positively correlated across voting groups, then a self-selection equilibrium can arise where the government's promise to repay its debt is credible. We illustrate this using a formal model where the alternative use of wealth is to acquire human capital. Journal of Economic Literature Classification Numbers: D72, E60, H63.

UR - https://www.scopus.com/pages/publications/0347176987

UR - https://www.scopus.com/pages/publications/0347176987#tab=citedBy

U2 - 10.1006/jeth.2000.2684

DO - 10.1006/jeth.2000.2684

M3 - Article

AN - SCOPUS:0347176987

SN - 0022-0531

VL - 94

SP - 80

EP - 105

JO - Journal of Economic Theory

JF - Journal of Economic Theory

IS - 1

ER -

Political Power and the Credibility of Government Debt

Abstract

All Science Journal Classification (ASJC) codes

Access to Document

Other files and links

Fingerprint

Cite this