A Positive Theory of Discretionary Policy, the Cost of Democratic Government and the Benefits of a Constitution - Errata

It was pointed to us by Shmuel Ben-Zvi that the article overlooks the fact that the government can increase the precision of its forecast of x_t, as of the beginning of period t, by using the signal y¹_t-1 in addition to the signal y⁰t. Incorporation of this additional information into the government's information set changes none of the qualitative results of the paper but it does affect some of the algebra. The necessary changes are detailed in what follows