Template-Type: ReDIF-Paper 1.0
Author-Name:  Marcus Drometer
Author-X-Name-First: Marcus
Author-X-Name-Last: Drometer

Title: Hyperbolic Discounting and Politics: The beneficial effects of bureaucrats
Abstract: This paper introduces hyperbolic discounting into politics. In our model,
politicians act according to the preferences of voters in order to be re-elected.
As voters' preferences are dynamically inconsistent, the political process results
in an allocation of the public budget that is distorted towards consumption ex-
penditures. We show that this inefficiency is mitigated when the influence of
bureaucrats who favour an excessive supply of public goods is taken into ac-
count. Finally, we derive a positive relationship between the optimal level of a
bureaucracy's influence and the relevance of long-term investments in a given
policy area.
Length:  20 pages
Creation-Date:  2006-11
File-URL: http://www.bgpe.de/texte/DP/008_drometer.pdf
File-Format: Application/pdf
File-Function: First version, 2006
Number: 008
Classification-JEL: D72, D73, H11
Keywords: Political Agency, Hyperbolic Discounting, Bureaucracy
Handle: RePEc:bav:wpaper:008_drometer