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- W2891605963 abstract "Attempting to shed light on the optimal size of government, economists have analyzed planning problems that specify a set of feasible taxation-spending policies and a social welfare function. The analysis characterizes the optimal policy choice of a planner who knows the welfare achieved by each policy. This paper examines choice of size of government by a planner who has partial knowledge of population preferences and the productivity of spending. This is a problem of decision making under ambiguity. Focusing on income-tax financed public spending for infrastructure that aims to enhance productivity, I examine scenarios where the planner observes the outcome of a status quo policy and uses various decision criteria (expected welfare, maximin, Hurwicz, minimax-regret) to choose policy. The analysis shows that the planner can reasonably choose a wide range of spending levels--thus, a society can rationalize having a small or large government. I conclude that to achieve credible conclusions about the desirable size of government, we need to vastly improve current knowledge of population preferences and the productivity of public spending." @default.
- W2891605963 created "2018-09-27" @default.
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- W2891605963 date "2012-07-01" @default.
- W2891605963 modified "2023-09-25" @default.
- W2891605963 title "Choosing Size of Government Under Ambiguity: Infrastructure Spending and Income Taxation" @default.
- W2891605963 doi "https://doi.org/10.3386/w18204" @default.
- W2891605963 hasPublicationYear "2012" @default.
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