Reelection or term limits the short and the long run view of economic policyReport as inadecuate




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Resumen

An incumbent’s drive for reelection can lead to political budget cycles. Thedistortion cycles cause in economic policy may be offset by the information theyindirectly provide about the incumbent-s competency. The informative content of cyclesdepends on the sophistication of voters, i.e. on whether they are rational or near rational.In a framework of individual candidates, constitutional clauses that prohibit thereelection of the president eliminate political budget cycles. One-term limits that allownon-immediate reelection also shift the focus from short-run cycles to the long-runsoundness of economic policies, and have superior welfare properties. Hence, the choiceis not reelection or not, but rather immediate or non-immediate reelection.



Author: Streb, Jorge M.; -

Source: http://repositorio.uchile.cl/



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