The Age of Legislators and Public Debt

Abstract Do older legislators increase public debt via borrowing? This study examines the existence of systemic relationship between average age of national legislators and the size of public debt by assembling panel data from OECD and IPU(age). The results from the two-step GMM model show a robust association between the average age of parliamentarians and public debt. A one year increase in the average of legislators raises public debt by 1--1.5. More specifically, a one standard--deviation increase in the average age of law makers(2.1 years) is associated with a rise of adjusted public debt by about 2.4 percentage points and that of gross public debt by about 3.1 percentage points. To explain the mechanism through which legislator age affects public debt, the study develops a simple tractable political--economy model. In this model legislators' su.bjective discount factor vary with age, reflecting effective differences in planning horizons. Older legislators rationally attach lower weights to future fiscal costs--leading to higher equilibrium public debt. The results from the model calibration corroborate the empirical results, differences in age related discounting factors of law-- makers result in varying responses to public debt accumulation. These results highlight legislator demographics as an indispensable channel in inter--temporal fiscal choices, distinct from the well documented factors such as population aging JEL Codes: H63; D72; J11