2010-03-20 papers

on Public Finance

Issue of 2010‒03‒20
one paper chosen by

Off-the-peak preferences over government size By Francisco Martínez Mora; M. Socorro Puy

Off-the-peak preferences over government size

By:	Francisco Martínez Mora; M. Socorro Puy
Abstract:	We show that preferences-bias towards overprovision or underprovision can explain the asymmetric location of electoral candidates with respect to the median voter. We analyze the determinants of preferences off-the-peak and find that: (i) The sign of the third derivative of the policy-induced utility function indicates whether preferences are bias towards overprovision (positive) or underprovision (negative). (ii) The analog of Kimball's coefficient of prudence can be used to measure the asymmetry of preferences. (iii) Consumers’risk aversion and government corruption (in the form of decreasing e¤ectiveness producing public good) induce voters’ preferences to be more intense towards underprovision.
Date:	2010–02
URL:	http://d.repec.org/n?u=RePEc:fda:fdaddt:2010-05&r=pub

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