Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296093 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11004
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We examine democratic public-good provision with heterogeneous legislators. Decisions are taken by majority rule and an agenda-setter proposes a level of the public good, taxes, and subsidies. Members are heterogeneous with respect to their benefits from the public good. We find that, depending on the status quo public-good level, the agenda-setter will form a coalition with the agents who most desire, or least desire, the public good, and we may observe 'strange bedfellow' coalitions. Moreover, public-good provision is a non-monotonic function of the status quo public-good level. In the dynamic setting, public-good provision fluctuates endogenously, even if the agenda-setter stays the same over time. Moreover, the more polarized the legislature is, the higher is the volatility of public-good provision and the longer it may take for a society to recover from negative shocks to public-good provision. We illustrate these findings for a two-party system with polarized parties.
Subjects: 
legislative bargaining
coalition
public goods
polarization
resilience
JEL: 
C73
D72
H50
Document Type: 
Working Paper
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