Dynamic Bargaining over Redistribution with Endogenous Distribution of Political Power

Saito, Yuta (2016): Dynamic Bargaining over Redistribution with Endogenous Distribution of Political Power.

Abstract

This paper investigates a dynamic capital taxation (and redistribution) problem with an endogenous political power balance. It is shown that the current redistribution, which reduces the future inequality, decreases the future needs for redistribution if the bargaining power is (at least partly) endogenized.

• Item Type: MPRA Paper
• Language: English
• Keywords: Legislative bargaining; Wealth inequality; Redistribution; Capital taxation
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E60 - General; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General; H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H30 - General

References

David P Baron and John A Ferejohn. Bargaining in legislatures. American political science review, 83 (04):1181–1206, 1989.

Marco Bassetto. Political economy of taxation in an overlapping-generations economy. Review of Economic Dynamics, 11(1):18–43, 2008.

Adam Bonica, Nolan McCarty, Keith T Poole, and Howard Rosenthal. Why hasn’t democracy slowed rising inequality? The Journal of Economic Perspectives, 27(3):103–123, 2013.

Maurice Duverger. Political parties: Their organization and activity in the modern state. Methuen, 1959. 8 Arend Lijphart. Patterns of democracy: Government forms and performance in thirty-six countries. Yale University Press, 2012.

Facundo Piguillem and Alessandro Riboni. Dynamic Bargaining over Redistribution in Legislatures. mimeo, 2015.

Thomas Piketty and Emmanuel Saez. A theory of optimal inheritance taxation. Econometrica, 81(5): 1851–1886, 2013.