Article citationsMore>>

Aghion, P., & Bolton, P. (1990). Government Domestic Debt and the Risk of Default: A Political-Economic Model of the Strategic Role of Debt. In R. Dornbusch, & M. Draghi (Eds.), Public Debt Management: Theory and History (pp. 315-344). Cambridge: Cambridge University Press.
https://doi.org/10.1017/CBO9780511628528.022

has been cited by the following article:

• TITLE: The Elasticity of Intertemporal Substitution: A Tool to Constrain Profligate Government Spending

  AUTHORS: Suzanna-Maria Paleologou

  KEYWORDS: Electoral Fiscal Profligacy, Public Consumption, Elasticity of Intertemporal Substitution

  JOURNAL NAME: Theoretical Economics Letters, Vol.10 No.3, June 22, 2020

  ABSTRACT: We construct a theoretical model to explain profligate electoral fiscal behaviour and to provide a tool, namely the estimated elasticity of intertemporal substitution, for the fiscal authorities to detect and timely constrain such behaviour to promote fiscal prudence. The key is to obtain data on the incumbent party preferred sequence of public consumption levels over time. The model frames this case using a CES utility function and provides one possible mechanism to explain why there are so many examples in the empirical literature that find insignificant electoral biases in fiscal variables.