On the Cost of Opportunistic Behavior in the Public Sector: A General‐Equilibrium Approach

Vasilev, Aleksandar

doi:10.1111/jpet.12206

Cited by 4 publications

(2 citation statements)

References 22 publications

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“…Therefore, lobbying does not lead to the utility maximizing outcome unless the lobbying power is such that the benchmark outcome is mimicked. This result is in line with the literature that highlights the role of rent‐seeking in generating misallocation and welfare loss, for example, Angelopoulos et al (2009), Vasilev (2017), and Huneeus and Kim (2021). Further, in this model the consumers will be worse off when the public input is under‐provided, since, in addition to the misalloctaion of the public input, the total output is also lower in this case.…”

Section: Lobbying For the Public Inputsupporting

confidence: 91%

“…Kerr et al (2014) examines how high entry costs into lobbying, and the resulting persistence in lobbying activities, can help explain the stability of economic policies. Finally, Vasilev (2017) develops a model of rent-seeking behavior of bureaucrats who seek higher wages in public sector employment which leads to a wage-premium and over-employment in the public sector.…”

Section: Related Literaturementioning

confidence: 99%

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Public expenditure allocation, lobbying, and growth

Radhakrishnan

2022

J Public Economic Theory

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I develop a two sector model of growth where the final good in each sector is produced using labor and a publicly provided private input (public input). The public input is funded by a proportional tax on the consumption of the two final goods. In the benchmark case, the government allocates the public input between the two sectors to maximize consumer welfare. I contrast the benchmark case to one where the public input allocation is determined via lobbying by firms in the two sectors. In this set up, I first show that allocation of the public input is determined by the relative lobbying power of the firms in the two sectors. Further, lobbying can generate the welfare maximizing allocation only under a very specific set of conditions and, if those set of conditions are not met, then an initial misallocation of the public input gets magnified over time.

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Section: Lobbying For the Public Inputsupporting

confidence: 91%

Section: Related Literaturementioning

confidence: 99%

Public expenditure allocation, lobbying, and growth

Radhakrishnan

2022

J Public Economic Theory

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How Important Are Consumer Confidence Shocks for the Propagation of Business Cycles in Bulgaria?

Vasilev¹

2022

Problems of Economic Transition

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This paper takes an otherwise standard real-business-cycle setup with government sector, and augments it with shocks to consumer confidence to study business cycle fluctuations. A surprise increase in consumer confidence generates higher utility, as the household values consumption more in that scenario. As a test case, the model is calibrated to Bulgaria after the introduction of the currency board (1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017)(2018). We find that shocks to consumer confidence by themselves cannot be the main driving force behind business cycle fluctuations, but when combined with technology shocks, model performance improves substantially. Therefore, allowing for additional factors, such as consumer confidence, to interact with technology shocks can be useful in explaining business cycle movements.

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A real-business-cycle model with human capital accumulation: lessons for Bulgaria (1999-2018)

Vasilev¹

2021

Macroeconomics and Finance in Emerging Market Economies

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On the Cost of Opportunistic Behavior in the Public Sector: A General‐Equilibrium Approach

Abstract: On the cost of opportunistic behavior in the public sector: A General-Equilibrium approach JEL Classification: E69, E62, E32, J45

Cited by 4 publications

References 22 publications

Public expenditure allocation, lobbying, and growth

Public expenditure allocation, lobbying, and growth

How Important Are Consumer Confidence Shocks for the Propagation of Business Cycles in Bulgaria?

A real-business-cycle model with human capital accumulation: lessons for Bulgaria (1999-2018)

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