Template-Type:ReDIF-Paper 1.0  
Title:Inequality and Political Consensus
Author-Name: Grüner, Hans Peter
Classification-JEL:C72, D31, D70, D72.
Keywords:inequality, representative democracy, political consensus, policy uncertain ty, comparative statics in political economy. 
Abstract: This paper develops a model of political consensus in order to explain the missing link between
   inequality and political redistribution. Political consensu s is an implicit agreement not to vote for extreme
   policy proposals. We show tha t such an agreement may play an efficiency-enhancing role. Voters anticipate
   that voting for extremist parties increases policy uncertainty in the future. A pol itical consensus among voters
   reduces policy uncertainty because power-seeking p oliticians propose non-discriminatory policies in their own
   interest. We study h ow much inequality can be sustained in a democracy and how the limits to redistr ibution
   vary with initial inequality. We find that more inequality need not lead to more redistribution. The maximum
   amount of redistribution decreases with ine quality if (and only if) agents are sufficiently patient. In this case
   inequalit y is politically self-sustaining.
Length: pages
Creation-Date: 1999-02
Revision-Date: 
Handle: RePEc:bon:bonsfa:591
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonsfa/bonsfa591.pdf
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