Self-imposition of public oversight |
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Authors: | Mark Gradstein |
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Affiliation: | 1.Ben Gurion University,Beer Sheva,Israel;2.CEPR,London,UK;3.CESifo,Munich,Germany;4.IZA,Bonn,Germany |
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Abstract: | We argue that policymakers may have personal interests in policy restraints channeled through public oversight. Self-imposition of public oversight can be beneficial for the policymaker because it may help alleviate the dynamic inconsistency problem that she otherwise faces. In the setting studied herein, self-imposed public oversight takes the form of a ceiling on tax rates, which can be overridden only with the legislature’s consent. Such a mechanism is shown to credibly commit the policymaker to future tax restraint, thus inducing larger productive effort. |
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