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Coalition governments, cabinet size, and the common pool problem: Evidence from the German states

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  • Baskaran, Thushyanthan

Abstract

The theoretical literature on common pool problems in fiscal policy suggests that government fragmentation increases public expenditures. In parliamentary regimes, the fragmentation hypothesis refers to (i) coalition governments and (ii) cabinet size. This paper explores the effect of coalition governments and cabinet size on public expenditures with panel data covering all 16 German states over the period 1975–2010. Identification is facilitated by the large within-variation in the incidence of coalition governments and the size of the cabinet in the German states. In addition, I exploit a feature of state electoral laws to construct a credible instrument for the likelihood of coalition governments.

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  • Baskaran, Thushyanthan, 2013. "Coalition governments, cabinet size, and the common pool problem: Evidence from the German states," European Journal of Political Economy, Elsevier, vol. 32(C), pages 356-376.
    • Handle: RePEc:eee:poleco:v:32:y:2013:i:c:p:356-376
    DOI: 10.1016/j.ejpoleco.2013.09.009
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    6. Dilla, Diana, 2017. "Staatsverschuldung und Verschuldungsmentalität [Public Debt and Debt Mentality]," MPRA Paper 79432, University Library of Munich, Germany.
    7. R. Aytimur, 2014. "Importance of status quo when lobbying a coalition government," Economics of Governance, Springer, vol. 15(3), pages 203-219, August.
    8. Benny Geys & Rune J. Sørensen, 2020. "Administrative Delegation of Budgetary Powers and Fiscal Performance," Kyklos, Wiley Blackwell, vol. 73(4), pages 477-499, November.
    9. Dušan Pavlović & Dimitros Xefteris, 2020. "Qualifying the common pool problem in government spending: the role of positional externalities," Constitutional Political Economy, Springer, vol. 31(4), pages 446-457, December.
    10. Boll, David & Sidki, Marcus, 2021. "The influence of political fragmentation on public enterprises: Evidence from German municipalities," European Journal of Political Economy, Elsevier, vol. 67(C).
    11. Héctor Bellido & Lorena Olmos & Juan Antonio Román-Aso, 2019. "Do political factors influence public health expenditures? Evidence pre- and post-great recession," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(3), pages 455-474, April.
    12. Alptekin, Huzeyfe & Freire, Danilo & Mignozzetti, Umberto Guarnier & Roman, Catarina, 2020. "The Effect of Legislature Size on Public Spending: A Meta-Analysis," SocArXiv xf7wp, Center for Open Science.
    13. Geschwind, Stephan & Roesel, Felix, 2022. "Taxation under direct democracy," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 536-554.
    14. Joaquín Artés & Ignacio Jurado, 2018. "Government fragmentation and fiscal deficits: a regression discontinuity approach," Public Choice, Springer, vol. 175(3), pages 367-391, June.
    15. Zohal Hessami, 2013. "Corruption, Public Procurement, and the Budget Composition: Theory and Evidence from OECD Countries," Working Paper Series of the Department of Economics, University of Konstanz 2013-27, Department of Economics, University of Konstanz.
    16. Schaltegger, Christoph A. & Weder, Martin, 2014. "Austerity, inequality and politics," European Journal of Political Economy, Elsevier, vol. 35(C), pages 1-22.
    17. Hessami, Zohal, 2014. "Political corruption, public procurement, and budget composition: Theory and evidence from OECD countries," European Journal of Political Economy, Elsevier, vol. 34(C), pages 372-389.
    18. Lopes da Fonseca, Mariana, 2017. "Political determinants of municipal accounts: Quasi-experimental evidence from Portugal," University of Göttingen Working Papers in Economics 238, University of Goettingen, Department of Economics, revised 2017.
    19. De Santo, Alessia & Le Maux, Benoît, 2023. "On the optimal size of legislatures: An illustrated literature review," European Journal of Political Economy, Elsevier, vol. 77(C).
    20. Pham, Hien Thuc & Carmignani, Fabrizio & Kler, Parvinder, 2018. "Thrift culture and the size of government," Economic Modelling, Elsevier, vol. 70(C), pages 571-578.
    21. J. Atsu Amegashie & Michael Batu, 2015. "Wider Boundaries: The Welfare State and International Remittances," CESifo Working Paper Series 5456, CESifo.

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    More about this item

    Keywords

    Government fragmentation; Common pool problems; Coalition government; Cabinet size; Public expenditures;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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