@article{18ecbc92a97c4789b1b4c2c1552a5a35,
title = "Engineering crises: Favoritism and strategic fiscal indiscipline",
abstract = "We develop a political economy theory of the endogenous emergence of fiscal crises based on the idea that the adjustment mechanism to a crisis favors some social groups, that may be induced ex-ante to vote for fiscal policies that are more likely to lead to a crisis. Greater levels of favoritism lead to a higher public debt and more frequent crises, as well as to higher public expenditure, if the favored group is large enough. We provide conditions under which the favored group strategically favors a weaker state's fiscal capacity and when constitutional limits on debt raise the utility of all poor.",
keywords = "entitlements, favoritism, fiscal capacity, fiscal crises, populism, public debt",
author = "Gilles Saint-Paul and Davide Ticchi and Andrea Vindigni",
note = "Funding Information: We are grateful for comments to two anonymous referees, Giuseppe Bertola, Adam Hoole, Giovanni Battista Pittaluga, to seminar participants at the Bank of Spain, the Paris School of Economics Macro Retreat, ESSIM, the University of Genova, the Bank of Finland, and the University of Reading. Gilles Saint-Paul gratefully acknowledges financial support from CEPREMAP, Paris Sciences Lettres and the PjSE Ecole Universitaire de Recherche under grant grant ANR-17-EURE-0001; and Davide Ticchi from IMT Lucca and Marche Polytechnic University. Funding Information: We are grateful for comments to two anonymous referees, Giuseppe Bertola, Adam Hoole, Giovanni Battista Pittaluga, to seminar participants at the Bank of Spain, the Paris School of Economics Macro Retreat, ESSIM, the University of Genova, the Bank of Finland, and the University of Reading. Gilles Saint‐Paul gratefully acknowledges financial support from CEPREMAP, Paris Sciences Lettres and the PjSE Ecole Universitaire de Recherche under grant grant ANR‐17‐EURE‐0001; and Davide Ticchi from IMT Lucca and Marche Polytechnic University. Publisher Copyright: {\textcopyright} 2021 John Wiley & Sons Ltd",
year = "2021",
month = nov,
doi = "10.1111/ecpo.12175",
language = "English (US)",
volume = "33",
pages = "583--610",
journal = "Economics and Politics",
issn = "0954-1985",
publisher = "Wiley-Blackwell",
number = "3",
}