Nice post by Raisa Sheriff and Lekha Chakraborty of NIPFP. Does democracy determine public expenditure decisions? With Nobel laureate Hurwicz’s revelation that it is impossible to have simultaneously a balanced budget, Pareto optimality (“you are better off without making anyone worse off”) and an incentive compatibility between Government and the citizens, we turn to pose a question, what exactly determine public expenditure decisions?1 Can a median voter reflect her preference for public expenditure priorities in her voting decisions? Antony Downs in his historic work (Downs, 1957), explained a moment of “democratic collapse” if the “costs of voting” (C) are higher than the voter’s faith in the probability of her vote changing the outcome (P) and the benefits she derives out of her
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Nice post by Raisa Sheriff and Lekha Chakraborty of NIPFP.