Published February 24, 2010
| public
Journal Article
Policy uncertainty, electoral securities and redistribution
- Creators
- Mattozzi, Andrea
Abstract
This article investigates how uncertainty about the adoption of a redistribution policy affects political support for redistribution when individuals can trade policy-contingent securities in the stock market. In equilibrium the support for redistribution is smaller than where no "policy-insurance market" is available. This implies that in economies with well-developed financial markets redistribution decreases with the level of participation in these markets and with income inequality. Furthermore, the existence of a policy-insurance market may lead to a less equal distribution of income than where no insurance is available even if a majority of individuals are redistributing resources through private transfers.
Additional Information
© 2010 by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association. Manuscript received February 2007; revised March 2008. I am grateful to Bob Inman, Andrew Postlewaite, Frank Schorfheide, and in particular to Antonio Merlo for their comments and encouragement. I also thank Mike Alvarez, Marco Cozzi, Alfredo Di Tillio, Federico Echenique, Jan Eeckhout, Jacob Goeree, Daniela Iorio, Matt Jackson, Dirk Krueger, Preston McAfee, Elena Pastorino, Nicola Persico, and two anonymous referees. All usual disclaimers apply. Please address correspondence to Andrea Mattozzi. Formerly SSWP 1229.Additional details
- Eprint ID
- 83808
- Resolver ID
- CaltechAUTHORS:20171211-133711487
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2017-12-20Created from EPrint's datestamp field
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