Pork-Barrel Spending under Cournot Legislators and the Quantity Equation

Soldatos, Gerasimos T. (2014): Pork-Barrel Spending under Cournot Legislators and the Quantity Equation. Published in: International Journal of Economics and Finance , Vol. 7, No. 3 (March 2015)

Abstract

This note makes the following two points based on Cournot utility functions of the legislators and on the government budget constraint viewed from the perspective of the equation of exchange. Without logrolling, i.e. with different perceptions of the budget constraint, there can be such a legislature preference structure that can turn a pork-barrel project into welfare-enhancing public expenditure depending on economic circumstances. With logrolling, i.e. with agreement at least regarding the size of the budget, the “pork” may be taken out of the project regardless the economic conjuncture. These results are independent of the utility function used, while the use of the quantity equation serves only as the simplest macroeconomic framework in which the two general points herein may be made.

• Item Type: MPRA Paper
• Language: English
• Keywords: Pork-barrel spending, budget deficit, quantity equation, Cournot legislators, logrolling
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation; H - Public Economics > H6 - National Budget, Deficit, and Debt > H61 - Budget ; Budget Systems

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