Choosing size of government under ambiguity: Infrastructure spending and income taxation

Charles Manski*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

I examine choice of size of government by a planner who has partial knowledge of population preferences and the productivity of public spending. Focusing on income tax-financed spending for infrastructure, I examine scenarios where the planner observes the outcome of a status quo policy and uses various decision criteria to choose policy. The analysis shows that the planner can reasonably choose a wide range of spending levels - thus, a society can rationalise having a small or large government. I conclude that to achieve credible conclusions about the desirable size of government, we need to improve current knowledge of preferences and the productivity of spending vastly.

Original languageEnglish (US)
Pages (from-to)359-376
Number of pages18
JournalEconomic Journal
Volume124
Issue number576
DOIs
StatePublished - Jan 1 2014

ASJC Scopus subject areas

  • Economics and Econometrics

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