Legislative Fiscal Policy Making with Reconsideration

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In recent years, economic scholars in a wide variety of specializations have become increasingly interested in questions of Political Economy. A central objective of this movement has been to supplement our understanding of the relationships between the political environment (including institutions) and the economic policies that are adopted. Though much progress has been made, virtually nothing is known about the strategic issues arising from the possibility that a legislature might choose to reconsider some provision of a law after its passage but prior to its implementation. Legislative reconsideration is a common occurrence in practice. Moreover, it gives rise to complex strategic issues. The adoption of a policy provision for some future period changes the political landscape. Further discussion of the issues prior to the law's implementation takes place against a different backdrop. Though the provision can be changed, repealed, or replaced before it becomes effective, its adoption alters the terms of the ensuing debate. The purpose of this project is to explore the effects of legislative reconsideration on economic policy selection. The analysis identifies and explores a tendency for reconsideration to create high concentration of political power (irrespective of whether policies are actually changed after adoption and prior to implementation). Using the tools of game theory, the project undertakes comparative institutional analysis, examining the role of reconsideration under a variety of alternative rules and procedures within the context of particular economic problems. It seeks to understand the mechanisms by which particular institutions control (or fail to control) the tendency toward high concentration of power, and to elucidate the implications for economic policy.The findings of this research are relevant to a wide range of practical issues. Collective choice problems are pervasive not only in public policy making, but also in cooperative research, education, partnerships, networks, and many other forms of social activity. These problems are resolved through a wide variety of formal and informal procedures. By improving our understanding of the relationships between procedures and outcomes, the study of collective choice will provide constructive guidance concerning the choice of procedures and the design of institutions. Insights concerning the effects of various rules on the influence of underrepresented groups may prove particularly useful.