Can budget institutions counteract political indiscipline?
Abstract
"The budget is an expression of political rather than economic priorities. We confirm this proposition for a group of new and potential members of the European Union, finding that politics dominates. The contemporary practice of democracy can increase budget deficits through not only ideological preferences, but also more fragmented government coalitions and higher voter participation. Long-term structural forces, triggered by societal divisions and representative electoral rules, have more ambiguous implications but also appear to increase budget pressures, as others have also found. However, our most robust, and hopeful, finding is that budget institutions - mechanisms and rules of the budget process - that create checks and balances have significant value in curbing fiscal pressures even when the politics is representative but undisciplined, and when long-term structural forces are unfavourable." Copyright CEPR, CES, MSH, 2006.Download Info
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic Info
Article provided by CEPR & CES & MSH in its journal Economic Policy.
Volume (Year): 21 (2006)
Issue (Month): 48 (October)
Pages: 689-739
Contact details of provider:
Postal: 2nd Floor, 53-56 Great Sutton Street, London EC1V 0DG
Phone: +44 (0)20 7183 8801
Fax: +44 (0)20 7183 8820
Email:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0266-4658
More information through EDIRC
Postal: Schackstr. 4, 80539 Munich
Phone: +49 (89) 2180-2748
Fax: +49 (89) 39 73 03
Email:
Web page: http://www.cesifo-group.de/portal/page/portal/ifoHome/f-about/f2aboutces
More information through EDIRC
Postal: 48 boulevard Jourdan - 75014 Paris
Phone: 01 43 13 63 00
Fax: 01 43 13 63 10
Email:
Web page: http://www.pse.ens.fr/
More information through EDIRC
Order Information:
Web: http://www.blackwellpublishing.com/subs.asp?ref=0266-4658
Related research
Keywords:Other versions of this item:
- Ashoka Mody & Stefania Fabrizio, 2006. "Can Budget Institutions Counteract Political Indiscipline?," IMF Working Papers 06/123, International Monetary Fund.
References
References listed on IDEASPlease report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ricardo Hausmann & Alberto Alesina & Rudolf Hommes & Ernesto H. Stein, 1998.
"Budget Institutions and Fiscal Performance in Latin America,"
Research Department Publications
4160, Inter-American Development Bank, Research Department.
- Alesina, Alberto & Hausmann, Ricardo & Hommes, Rudolf & Stein, Ernesto, 1999. "Budget institutions and fiscal performance in Latin America," Journal of Development Economics, Elsevier, vol. 59(2), pages 253-273, August.
- Alberto Alesina & Ricardo Hausmann & Rudolf Hommes & Ernesto Stein, 1996. "Budget Institutions and Fiscal Performance in Latin America," NBER Working Papers 5586, National Bureau of Economic Research, Inc.
- Stein, Ernesto & Hommes, Rudolf & Hausmann, Ricardo & Alesina, Alberto, 1999. "Budget Institutions and Fiscal Performance in Latin America," Scholarly Articles 4553021, Harvard University Department of Economics.
- Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002.
"Electoral Systems And Public Spending,"
The Quarterly Journal of Economics,
MIT Press, vol. 117(2), pages 609-657, May.
- Roberto Perotti & Massimo V. Rostagno & Gian-Maria Milesi-Ferretti, 2001. "Electoral System and Public Spending," IMF Working Papers 01/22, International Monetary Fund.
- Torsten Persson, 2001.
"Do Political Institutions Shape Economic Policy?,"
NBER Working Papers
8214, National Bureau of Economic Research, Inc.
- Torsten Persson, 2002. "Do Political Institutions Shape Economic Policy?," Econometrica, Econometric Society, vol. 70(3), pages 883-905, May.
- Holger Gleich, 2003. "Budget institutions and fiscal performance in Central and Eastern European countries," Working Paper Series 215, European Central Bank.
- Ernesto H. Stein & Ernesto Talvi & Alejandro Grisanti, 1998.
"Institutional Arrangements and Fiscal Performance: The Latin American Experience,"
Research Department Publications
4110, Inter-American Development Bank, Research Department.
- Ernesto Stein & Ernesto Talvi & Alejandro Grisanti, 1999. "Institutional Arrangements and Fiscal Performance: The Latin American Experience," NBER Chapters, in: Fiscal Institutions and Fiscal Performance, pages 103-134 National Bureau of Economic Research, Inc.
- Ernesto Stein & Ernesto Talvi & Alejandro Grisanti, 1998. "Institutional Arrangements and Fiscal Performance: The Latin American Experience," NBER Working Papers 6358, National Bureau of Economic Research, Inc.
- Aghion, Philippe & Alesina, Alberto & Trebbi, Francesco, 2004.
"Endogenous Political Institutions,"
Scholarly Articles
4481498, Harvard University Department of Economics.
- Philippe Aghion & Alberto Alesina & Francesco Trebbi, 2004. "Endogenous Political Institutions," The Quarterly Journal of Economics, MIT Press, vol. 119(2), pages 565-611, May.
- Philippe Aghion & Albero Alesina & Francesco Trebbi, 2002. "Endogenous Political Institutions," Harvard Institute of Economic Research Working Papers 1957, Harvard - Institute of Economic Research.
- Aghion, Philippe & Alesina, Alberto F & Trebbi, Francesco, 2002. "Endogenous Political Institutions," CEPR Discussion Papers 3473, C.E.P.R. Discussion Papers.
- Philippe Aghion & Alberto Alesina & Francesco Trebbi, 2002. "Endogenous Political Institutions," NBER Working Papers 9006, National Bureau of Economic Research, Inc.
- Aghion, P. & Alesina, A. & Trebbi, F., 2004. "Endogenous political institutions," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
- Tim Besley, 2002.
"Political institutions and policy choices: evidence from the United States,"
IFS Working Papers
W02/13, Institute for Fiscal Studies.
- Timothy Besley & Anne Case, 2003. "Political Institutions and Policy Choices: Evidence from the United States," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 7-73, March.
- Besley, Timothy J. & Case, Anne, 2002. "Political Institutions and Policy Choices: Evidence from the United States," CEPR Discussion Papers 3498, C.E.P.R. Discussion Papers.
- Andres Velasco, 1999. "A Model of Endogenous Fiscal Deficits and Delayed Fiscal Reforms," NBER Chapters, in: Fiscal Institutions and Fiscal Performance, pages 37-58 National Bureau of Economic Research, Inc.
- Olivier Blanchard, 2005.
"European Unemployment: The Evolution of Facts and Ideas,"
NBER Working Papers
11750, National Bureau of Economic Research, Inc.
- Olivier Blanchard, 2006. "European unemployment: the evolution of facts and ideas," Economic Policy, CEPR & CES & MSH, vol. 21(45), pages 5-59, 01.
- Nouriel Roubini & Jeffrey Sachs, 1989. "Government Spending and Budget Deficits in the Industrial Economies," NBER Working Papers 2919, National Bureau of Economic Research, Inc.
- Wyplosz, Charles, 2002. "Fiscal Policy: Institutions versus Rules," CEPR Discussion Papers 3238, C.E.P.R. Discussion Papers.
- Yianos Kontopoulos & Roberto Perotti, 1999. "Government Fragmentation and Fiscal Policy Outcomes: Evidence from OECD Countries," NBER Chapters, in: Fiscal Institutions and Fiscal Performance, pages 81-102 National Bureau of Economic Research, Inc.
- Mark Hallerberg & Jürgen von Hagen, 1999.
"Electoral Institutions, Cabinet Negotiations, and Budget Deficits in the European Union,"
NBER Chapters,
in: Fiscal Institutions and Fiscal Performance, pages 209-232
National Bureau of Economic Research, Inc.
- Mark Hallerberg & Jurgen von Hagen, 1997. "Electoral Institutions, Cabinet Negotiations, and Budget Deficits in the European Union," NBER Working Papers 6341, National Bureau of Economic Research, Inc.
- Dennis C. Mueller & Thomas Stratmann, 2002.
"The Economic Effects of Democratic Participation,"
CESifo Working Paper Series
656, CESifo Group Munich.
- Mueller, Dennis C. & Stratmann, Thomas, 2003. "The economic effects of democratic participation," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 2129-2155, September.
- Perotti, Roberto & Kontopoulos, Yianos, 2002. "Fragmented fiscal policy," Journal of Public Economics, Elsevier, vol. 86(2), pages 191-222, November.
- Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-64, August.
- von Hagen, Jurgen & Harden, Ian J., 1995.
"Budget processes and commitment to fiscal discipline,"
European Economic Review,
Elsevier, vol. 39(3-4), pages 771-779, April.
- International Monetary Fund, 1996. "Budget Processes and Commitment to Fiscal Discipline," IMF Working Papers 96/78, International Monetary Fund.
- Henning Bohn, 1998. "The Behavior Of U.S. Public Debt And Deficits," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 949-963, August.
- Poterba, James M, 1994.
"State Responses to Fiscal Crises: The Effects of Budgetary Institutions and Politics,"
Journal of Political Economy,
University of Chicago Press, vol. 102(4), pages 799-821, August.
- James M. Poterba, 1995. "State Responses to Fiscal Crisis: The Effects of Budgetary Institutionsand Politics," NBER Working Papers 4375, National Bureau of Economic Research, Inc.
- Barry Eichengreen & Ricardo Hausmann & Jürgen Von Hagen, 1999. "Reforming Budgetary Institutions in Latin America: The Case for a National Fiscal Council," Open Economies Review, Springer, vol. 10(4), pages 415-442, October.
Citations
Blog mentions
As found by EconAcademics.org, the blog aggregator for Economics research:- Mody on Institutional Change
by Karl Whelan in The Irish Economy on 2010-07-23 10:19:26
Cited by:
- Roel M.W.J. Beetsma & Frederick van der Ploeg, 2007. "Partisan Public Investment and Debt: The Case for Fiscal Restrictions," Economics Working Papers ECO2007/37, European University Institute.
- Ringa Raudla, 2010. "Governing budgetary commons: what can we learn from Elinor Ostrom?," European Journal of Law and Economics, Springer, vol. 30(3), pages 201-221, December.
- Stefania Fabrizio & Ashoka Mody, 2010.
"Breaking The Impediments To Budgetary Reforms: Evidence From Europe,"
Economics and Politics,
Wiley Blackwell, vol. 22(3), pages 362-391, November.
- Ashoka Mody & Stefania Fabrizio, 2008. "Breaking the Impediments to Budgetary Reforms: Evidence from Europe," IMF Working Papers 08/82, International Monetary Fund.
- Ian Lienert, 2007. "British Influence on Commonwealth Budget Systems: The Case of the United Republic of Tanzania," IMF Working Papers 07/78, International Monetary Fund.
- Beetsma, Roel & van der Ploeg, Frederick, 2007.
"The Political Economy of Public Investment,"
CEPR Discussion Papers
6090, C.E.P.R. Discussion Papers.
- Roel M.W.J.Beetsma & Frederick van der Ploeg, 2007. "The political economy of public investment," European Economy - Economic Papers 276, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Anthony Annett, 2007. "Toward a Robust Fiscal Framework for Iceland: Motivation and Practical Suggestions," IMF Working Papers 07/235, International Monetary Fund.
- Ghiath Shabsigh & Nadeem Ilahi, 2007. "Looking Beyond the Fiscal: Do Oil Funds Bring Macreconomic Stability?," IMF Working Papers 07/96, International Monetary Fund.
- Fédéric Holm-Hadulla & Sebastian Hauptmeier & Philipp Rother, 2010. "The impact of numerical expenditure rules on budgetary discipline over the cycle," Working Paper Series 1169, European Central Bank.
- Sophia Gollwitzer & Eteri Kvintradze & Tej Prakash & Luis-Felipe Zanna & Era Dabla-Norris & Richard Allen & Irene Yackovlev & Victor Duarte Lledo, 2010. "Budget Institutions and Fiscal Performance in Low-Income Countries," IMF Working Papers 10/80, International Monetary Fund.
- Lars-Erik Borge & Torberg Falch & Per Tovmo, 2007.
"Public Sector Efficiency: The Roles of Political and Budgetary Institutions, Fiscal Capacity and Democratic Participation,"
Working Paper Series
8407, Department of Economics, Norwegian University of Science and Technology.
- Lars-Erik Borge & Torberg Falch & Per Tovmo, 2008. "Public sector efficiency: the roles of political and budgetary institutions, fiscal capacity, and democratic participation," Public Choice, Springer, vol. 136(3), pages 475-495, September.
- Stefania Fabrizio & Daniel Leigh & Ashoka Mody, 2009.
"The second transition: Eastern Europe in perspective,"
European Economy - Economic Papers
366, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Daniel Leigh & Stefania Fabrizio & Ashoka Mody, 2009. "The Second Transition: Eastern Europe in Perspective," IMF Working Papers 09/43, International Monetary Fund.
- Grigoli, Francesco & Mills, Zachary & Verhoeven, Marijn & Vlaicu, Razvan, 2012. "MTEFs and fiscal performance: panel data evidence," Policy Research Working Paper Series 6186, The World Bank.
- F. Heylen & A. Hoebeeck & T. Buyse, 2011. "Fiscal consolidation, institutions and institutional reform: a multivariate analysis of public debt dynamics," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/763, Ghent University, Faculty of Economics and Business Administration.
- Ana María Iregui & Ligia Melo B. & Jorge Ramos F., 2006.
"¿Hacia dónde se dirigen los recursos de Inversión del Presupuesto General de la Nación,"
BORRADORES DE ECONOMIA
003810, BANCO DE LA REPÚBLICA.
- Ana María Iregui & Ligia Melo B. & Jorge Ramos F., . "¿Hacia dónde se dirigen los recursos de Inversión del Presupuesto General de la Nación?," Borradores de Economia 405, Banco de la Republica de Colombia.
- Alexander Plekhanov & Manmohan S. Kumar & Daniel Leigh, 2007. "Fiscal Adjustments: Determinants and Macroeconomic Consequences," IMF Working Papers 07/178, International Monetary Fund.
- Koch, Daniel, 2011. "Wirksame Begrenzung von Staatsverschuldung auf europäischer Ebene," Wirtschaftswissenschaftliche Beiträge 114, Julius-Maximilians-Universität Würzburg, Lehrstuhl für Volkswirtschaftslehre, insbes. Wirtschaftsordnung und Sozialpolitik.
- Krogstrup, Signe & Wyplosz, Charles, 2010. "A common pool theory of supranational deficit ceilings," European Economic Review, Elsevier, vol. 54(2), pages 269-278, February.
Lists
This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.Statistics
Access and download statisticsCorrections
When requesting a correction, please mention this item's handle: RePEc:bla:ecpoli:v:21:y:2006:i:48:p:689-739For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.

