Abstract

GUTIERREZ, Javier A.; GUZMAN, Carolina  and  JIMENEZ, Ulpiano J.. POLITICAL ECONOMY AND PUBLIC FINANCES: THEORY, EVIDENCE AND LAB RESULTS. Rev.econ.inst. [online]. 2000, vol.2, n.3, pp.104-148. ISSN 0124-5996.

This paper summarizes theoretical models and empirical evidence concerning the political economy of public finances. It emphasizes political and institutional issues that influence different levels of public debt and fiscal deficits in countries and subnational entities with similar economic performance, and describes fiscal contract relationships between governors and voters using principal-agent theory. It then applies methods of experimental economics and game theory to evaluate how these relationships contribute to debt accumulation and fiscal unbalances, in a laboratory experiment in which participants act as agents (governors) and then as principals (voters).

Keywords : experimental economics; public finances; fiscal deficit; principal-agent.

        · abstract in Spanish     · text in Spanish     · Spanish ( pdf )