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Please use this identifier to cite or link to this item: http://hdl.handle.net/1783.1/7464
Title: A theory of government procrastination
Authors: Furusawa, Taiji
Lai, Edwin L. -C.
Keywords: Present-bias
Procrastination
Policy implementation
Issue Date: Dec-2011
Series/Report no.: CESifo Working Paper No. 3680
Abstract: We present a theory to explain government procrastination as a consequence of its present-bias resulting from the political uncertainty in a two-party political system. We show that under a two-party political system the party in office tends to be present-biased. This may lead to procrastination of socially beneficial policies that carry upfront costs but yield long-term benefits. However, procrastination is often not indefinite even as we consider an infinite-horizon game. There exist equilibria in which the policy is implemented, and in many cases carried out to completion in finite time. When the net social benefit is large, there is no procrastination problem. When the net social benefit is small, the policy can be procrastinated indefinitely, though there may co-exist some gradual implementation equilibria. When the net social benefit is intermediate in magnitude, there are a few types of procrastination equilibria, including gradual implementation. The theory predicts that a government with a more strongly predominant party tends to procrastinate less.
URI: http://hdl.handle.net/1783.1/7464
Appears in Collections:ECON Working Papers

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