ECONOMIC POLICIES IN A DEMOCRACY

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Abstract
SUMMARY: Assumptions concerning the political behaviour of voters and politicians have first been made by A. Downs. Using these assumptions and considering several structural characteristics of democracy, the author of this paper attempts to develop some tendencies of economic policy. Since these tendencies are not only subject to the political but also to the economic situation of the country in question, additional assumptions upon the structure of economy have to be made. The present paper deals with a growing economy; it is assumed to work on a high level of diversification and consumption. Some sectors expand however only slowly, others even decline. Given these assumptions, the governmental economic policy will favour I. sectors with low rates of growth, and 2. sectors with low capital/ employment ratios. There exist, however, priorities about the measures to be taken: Import restriction is preferred to export promotion, export promotion to a policy of public buying and storing; even less estimated are public subsidies (provided costs of storing can be neglected and/or elasticities of demand and supply are low). The paper finally shows, how the tendencies of economic policy vary by changing political and economic structures of democracy.

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