This paper, authored by Alberto Alesina and Guido Tabellini, explores the dynamics of fiscal deficits and government debt in a democratic context. The authors argue that in a system where policymakers with differing preferences alternate in office, government debt becomes a strategic variable used to influence successors. Specifically, if policymakers disagree on the composition of public spending between two goods, the economy exhibits a bias towards higher deficits. The paper finds that the equilibrium level of government debt is higher compared to what would be optimal with a benevolent social planner. The degree of polarization between governments and the likelihood of the current government not being reelected are key factors in determining the equilibrium level of debt. The model suggests that these dynamics can explain the observed differences in fiscal policies across countries and over time, particularly in the context of the United States. The paper also discusses the implications for political institutions and provides empirical testable predictions.This paper, authored by Alberto Alesina and Guido Tabellini, explores the dynamics of fiscal deficits and government debt in a democratic context. The authors argue that in a system where policymakers with differing preferences alternate in office, government debt becomes a strategic variable used to influence successors. Specifically, if policymakers disagree on the composition of public spending between two goods, the economy exhibits a bias towards higher deficits. The paper finds that the equilibrium level of government debt is higher compared to what would be optimal with a benevolent social planner. The degree of polarization between governments and the likelihood of the current government not being reelected are key factors in determining the equilibrium level of debt. The model suggests that these dynamics can explain the observed differences in fiscal policies across countries and over time, particularly in the context of the United States. The paper also discusses the implications for political institutions and provides empirical testable predictions.