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Do budgetary institutions mitigate the common pool problem? New empirical evidence for the EU

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  • Jakob Haan
  • Richard Jong-A-Pin

    ()

  • Jochen Mierau

Abstract

We analyze how budgetary institutions affect government budget deficits in member states of the European Union during 1984–2003 employing new indicators provided by Hallerberg et al. ( 2009 ). Using panel fixed effects models, we examine whether the impact of budgetary institutions on budget deficits is conditioned by political fragmentation (i.e., ideological differences among parties in government) and size fragmentation (i.e., the effective number of parties in government or the number of spending ministers). Our results suggest that strong budgetary institutions, no matter whether they are based on delegation to a strong minister of finance or on fiscal contracts, reduce the deficit bias in case of strong ideological fragmentation. In contrast, the impact of budgetary institutions is not conditioned by size fragmentation. Copyright The Author(s) 2013

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Bibliographic Info

Article provided by Springer in its journal Public Choice.

Volume (Year): 156 (2013)
Issue (Month): 3 (September)
Pages: 423-441

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Handle: RePEc:kap:pubcho:v:156:y:2013:i:3:p:423-441

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Web page: http://www.springerlink.com/link.asp?id=100332

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Keywords: Budgetary institutions; Fiscal policy; Political fragmentation; Size fragmentation; H62;

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Citations

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Cited by:
  1. Nerlich, Carolin & Reuter, Wolf Heinrich, 2013. "The design of national fiscal frameworks and their budgetary impact," Working Paper Series 1588, European Central Bank.
  2. Suari Andreu, Eduard & Mierau, Jochen O., 2014. "Fiscal rules and government size in the European Union," Research Report 14009-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
  3. Björn Kauder & Benjamin Larin & Niklas Potrafke, 2014. "Was bringt uns die große Koalition? Perspektiven der Wirtschaftspolitik," Ifo Working Paper Series Ifo Working Paper No. 172, Ifo Institute for Economic Research at the University of Munich.

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