General fund financing versus earmarked taxes: An alternative model of budgetary choice in a democracy
✍ Scribed by Alex Athanassakos
- Publisher
- Springer US
- Year
- 1990
- Tongue
- English
- Weight
- 801 KB
- Volume
- 66
- Category
- Article
- ISSN
- 0048-5829
No coin nor oath required. For personal study only.
✦ Synopsis
This paper presents an alternative model of budgetary choices in a direct democracy. Our model is not only more consistent with the underlying assumptions of consumer theory, but also is easier to apply to the study of problems such as the impact of lump-sum subsidies, changes in the costs of production, and so forth, on the equilibrium levels of collective variables.
The model appears to account for the hitherto inexplicable perverse results that plague many of the general fund financing models discussed in the literature to date.
We also show that if one corrects for the current incompatibility of assumptions about decisionmaking at the micro level, then the resulting budget under GFF is always greater or equal to that under earmarked taxes. This is a much less ambiguous result than that obtained in previous models where anything could happen. * 1 would like to thank professors J. Buttrick, R. Latham, and C. Plourde for their helpful comments and criticisms.