Reelection or term limits? The short and the long view of economic policy

No 144, CEMA Working Papers: Serie Documentos de Trabajo. from Universidad del CEMA

Abstract: An incumbent's drive for reelection can lead to political budget cycles. The distortion cycles cause in economic policy may be offset by the information they indirectly provide about the incumbent's competency. The informative content of cycles depends on the sophistication of voters, i.e. on whether they are rational or near rational. In a framework of individual candidates, constitutional clauses that prohibit the reelection of the president eliminate political budget cycles. One-term limits that allow non-immediate reelection also shift the focus from short-run cycles to the long-run soundness of economic policies, and have superior welfare properties. Hence, the choice is not reelection or not, but rather immediate or non-immediate reelection.

Keywords: rotation principle; term limits; non-immediate reelection; political budget cycles; rational and near rational voters. (search for similar items in EconPapers)
JEL-codes: D7 E6 (search for similar items in EconPapers)
Date: 1999-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: Reelection or term limits? The short and the long run view of economic policy (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:cem:doctra:144

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