Counterfiscal policies and partisan politics: evidence from industrialized countries
AbstractAccording to partisan theories of macroeconomic policy, left-wing parties are more concerned with unemployment while right-wing parties tend to weigh the costs of inflation higher. An implication of partisan theories is that partisan policy differences should depend on the state of the economy, with left-wing governments conducting relatively more expansive policies during recessions. We test whether left-wing governments are more favourably inclined towards countercyclical fiscal policies than their right-wing counterparts using a panel data set of 18 OECD countries from 1980 to 1992. The results are supportive of partisan theories. The structural deficit is significantly higher under left-wing governments when unemployment is high or rising while the ideology of the government party (parties) has no significant impact on the structural deficit when unemployment is low or falling.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics.
Volume (Year): 29 (1997)
Issue (Month): 2 ()
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- Reichenvater, Arno, 2007. "Business Cycles, Political Incentives and the Macroeconomy: Comparison of Models," MPRA Paper 5527, University Library of Munich, Germany.
- Beate Jochimsen & Robert Nuscheler, 2011. "The political economy of the German Lander deficits: weak governments meet strong finance ministers," Applied Economics, Taylor & Francis Journals, vol. 43(19), pages 2399-2415.
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