Dirk Niepelt: Institute for International Economic Studies, Stockholm University, Postal: Stockholm University, S-106 69 Stockholm, Sweden
Abstract: A balanced budget requirement directly affects the intra-generational wealth distribution and influences the level of government spending. Both effects give rise to distributive conflicts that can explain why some groups support balanced budget rules while other groups in the same generation oppose them. Simulations suggest that such distributive conflicts are prevalent. I argue that intra-generational distributive conflicts offer a more convincing explanation for the observed partial support for balanced budget rules than alternative theories based on inter-generational conflict or efficiency considerations.
26 pages, July 8, 2003
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