Politico-economic equivalence

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningfagfællebedømt

Traditional "economic equivalence'' results, like the Ricardian equivalence proposition, define equivalence classes over exogenous policies. We derive "politico-economic equivalence" conditions that apply in environments where policy is endogenous and chosen sequentially. A policy regime and a state are equivalent to another such pair if both pairs give rise to the same allocation in politico-economic equilibrium. The equivalence conditions help to identify factors that render institutional change non-neutral and to construct politico-economic equilibria in new policy regimes. We exemplify their use in the context of several applications, relating to social security reform, tax-smoothing policies and measures to correct externalities.
TidsskriftReview of Economic Dynamics
Udgave nummer4
Sider (fra-til)843-862
Antal sider20
StatusUdgivet - okt. 2015

ID: 143185614