Political Institutions and the Dynamics of Public

We present a theoretical model of the provision of a durable public good over an in\u85nite horizion. In each period, there is a societal endowment of which each of n districts owns a share. This endowment can either be invested in the public good or consumed. We char-acterize the planners optimal solution and time path of investment and consumption. We then consider alternative political mechanisms for deciding on the time path, and analyze the Markov perfect equilibrium of these mechanisms. One class of these mechanisms involves a legislature where representatives of each district bargain with each other to decide how to divide the current periods societal endowment between investment in the public good and transfers to each district. The second class of mechanisms involves the districts making inde-pendent decisions for how to divide their own share of the endowment between consumption and investment. We conduct an experiment to assess the performance of these mechanisms