Do political institutions shape economic policy? I argue that this question should naturally appeal to economists. Moreover, the answer is in the affirmative, both in theory and in practice. In particular, recent theoretical work predicts systematic effects of electoral rules and political regimes on the size and composition of government spending. Results from ongoing empirical work indicate that such effects are indeed present in the data. Some empirical results are consistent with theoretical predictions: presidential regimes have smaller governments and countries with majoritarian elections have smaller welfare-state programs and less corruption. Other results present puzzles for future research: the adjustment to economic events appears highly institution-dependent, as does the timing and nature of the electoral cycle. Copyright The Econometric Society 2002.
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Article provided by Econometric Society in its journal Econometrica.
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Torsten Persson & Gerard Roland & Guido Tabellini, .
"Comparative Politics and Public Finance,"
Working Papers
114, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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Torsten Persson & Guido Tabellini & Francesco Trebbi, .
"Electoral Rules and Corruption,"
Working Papers
182, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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