IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v80y2014i3p614-632.html
   My bibliography  Save this article

Public Spending and the Paradox of Supermajority Rule

Author

Listed:
  • Dongwon Lee
  • Thomas E. Borcherding
  • Youngho Kang

Abstract

This article examines the paradox that a supermajority rule in a legislature promotes excessive government spending. We propose a simple conjecture: If rent‐seeking coalitions dominate legislative politics and if individual legislators' demands for rent‐seeking activities are price‐inelastic, a change of legislative rules from simple majority to a supermajority will lead to greater public spending, other things equal. Using data from U.S. state legislatures, 1970 to 2007, we find that the adoption of a supermajority rule has a robust, positive impact on various types of tax revenues and government expenditures.

Suggested Citation

  • Dongwon Lee & Thomas E. Borcherding & Youngho Kang, 2014. "Public Spending and the Paradox of Supermajority Rule," Southern Economic Journal, John Wiley & Sons, vol. 80(3), pages 614-632, January.
    • Handle: RePEc:wly:soecon:v:80:y:2014:i:3:p:614-632
    DOI: 10.4284/0038-4038-2012.205
    as

    Download full text from publisher

    File URL: https://doi.org/10.4284/0038-4038-2012.205
    Download Restriction: no
    File URL: https://libkey.io/10.4284/0038-4038-2012.205?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
    2. Knight, Brian G., 2000. "Supermajority voting requirements for tax increases: evidence from the states," Journal of Public Economics, Elsevier, vol. 76(1), pages 41-67, April.
    3. Alm, James & Evers, Mark, 1991. "The Item Veto and State Government Expenditures," Public Choice, Springer, vol. 68(1-3), pages 1-15, January.
    4. DelRossi, Alison F. & Inman, Robert P., 1999. "Changing the price of pork: the impact of local cost sharing on legislators' demands for distributive public goods," Journal of Public Economics, Elsevier, vol. 71(2), pages 247-273, February.
    5. Persson, Torsten & Roland, Gerard & Tabellini, Guido, 2007. "Electoral Rules and Government Spending in Parliamentary Democracies," Quarterly Journal of Political Science, now publishers, vol. 2(2), pages 155-188, May.
    6. Gabel, Matthew J & Hager, Gregory L, 2000. "How to Succeed at Increasing Spending without Really Trying: The Balanced Budget Amendment and the Item Veto," Public Choice, Springer, vol. 102(1-2), pages 19-23, January.
    7. Shaviro, Daniel, 1997. "Do Deficits Matter?," University of Chicago Press Economics Books, University of Chicago Press, number 9780226751122, Febrero.
    8. Dearden, James A & Husted, Thomas A, 1993. "Do Governors Get What They Want?: An Alternative Examination of the Line-Item Veto," Public Choice, Springer, vol. 77(4), pages 707-723, December.
    9. Mueller,Dennis C. (ed.), 1997. "Perspectives on Public Choice," Cambridge Books, Cambridge University Press, number 9780521553773.
    10. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-475, March.
    11. John Bradbury & Joseph Johnson, 2006. "Do supermajority rules limit or enhance majority tyranny? evidence from the US States, 1960–1997," Public Choice, Springer, vol. 127(3), pages 429-441, June.
    12. David J. Bjornstad & James R. Kahn (ed.), 1996. "The Contingent Valuation of Environmental Resources," Books, Edward Elgar Publishing, number 731.
    13. Wallace E. Oates, 2006. "On the Theory and Practice of Fiscal Decentralization," Working Papers 2006-05, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
    14. Luis Miller & Christoph Vanberg, 2013. "Decision costs in legislative bargaining: an experimental analysis," Public Choice, Springer, vol. 155(3), pages 373-394, June.
    15. de Figueiredo, Rui Jr., 2003. "Budget institutions and political insulation: why states adopt the item veto," Journal of Public Economics, Elsevier, vol. 87(12), pages 2677-2701, December.
    16. H. Youn Kim, 1988. "The Consumer Demand for Education," Journal of Human Resources, University of Wisconsin Press, vol. 23(2), pages 173-192.
    17. Gradstein, Mark, 1999. "Optimal taxation and fiscal constitution," Journal of Public Economics, Elsevier, vol. 72(3), pages 471-485, June.
    18. Avinash Dixit & Gene M. Grossman & Faruk Gul, 2000. "The Dynamics of Political Compromise," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 531-568, June.
    19. Borcherding, Thomas E., 1985. "The causes of government expenditure growth: A survey of the U.S. evidence," Journal of Public Economics, Elsevier, vol. 28(3), pages 359-382, December.
    20. Gordon Tullock, 1959. "Problems of Majority Voting," Journal of Political Economy, University of Chicago Press, vol. 67(6), pages 571-571.
    21. Groseclose, Tim & Snyder, James M., 1996. "Buying Supermajorities," American Political Science Review, Cambridge University Press, vol. 90(2), pages 303-315, June.
    22. Dongwon Lee & Dongil Kim & Thomas E. Borcherding, 2013. "Tax Structure and Government Spending: Does the Value-Added Tax Increase the Size of Government?," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(3), pages 541-570, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mahajan, Aseem & Pongou, Roland & Tondji, Jean-Baptiste, 2023. "Supermajority politics: Equilibrium range, policy diversity, utilitarian welfare, and political compromise," European Journal of Operational Research, Elsevier, vol. 307(2), pages 963-974.
    2. Leandro De Magalhães & Lucas Ferrero, 2015. "Separation of powers and the tax level in the U.S. states," Southern Economic Journal, John Wiley & Sons, vol. 82(2), pages 598-619, October.
    3. William B. Hankins, 2022. "Revisiting the effect of supermajority requirements on fiscal outcomes," Southern Economic Journal, John Wiley & Sons, vol. 88(4), pages 1599-1625, April.
    4. Björn Kauder & Niklas Potrafke, 2016. "Supermajorities and Political Rent Extraction," Kyklos, Wiley Blackwell, vol. 69(1), pages 65-81, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dongwon Lee, 2016. "Supermajority rule and bicameral bargaining," Public Choice, Springer, vol. 169(1), pages 53-75, October.
    2. Dongwon Lee, 2015. "Supermajority rule and the law of 1/n," Public Choice, Springer, vol. 164(3), pages 251-274, September.
    3. Doessel, Darrel & Valadkhani, Abbas, 2003. "The Demand for Current Public Expenditure in Fiji: Theory and Empirical Results," MPRA Paper 50392, University Library of Munich, Germany.
    4. Facchini, Francois, 2014. "The determinants of public spending: a survey in a methodological perspective," MPRA Paper 53006, University Library of Munich, Germany.
    5. Persson, Torsten & Tabellini, Guido, 2002. "Political economics and public finance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 24, pages 1549-1659, Elsevier.
    6. D.P. Doessel & Abbas Valadkhani, 2002. "Public Finance and The Size of Government: A Literature Review and Econometric Results for Fiji," School of Economics and Finance Discussion Papers and Working Papers Series 108, School of Economics and Finance, Queensland University of Technology.
    7. Dilla, Diana, 2017. "Staatsverschuldung und Verschuldungsmentalität [Public Debt and Debt Mentality]," MPRA Paper 79432, University Library of Munich, Germany.
    8. William B. Hankins, 2022. "Revisiting the effect of supermajority requirements on fiscal outcomes," Southern Economic Journal, John Wiley & Sons, vol. 88(4), pages 1599-1625, April.
    9. John Bradbury & Joseph Johnson, 2006. "Do supermajority rules limit or enhance majority tyranny? evidence from the US States, 1960–1997," Public Choice, Springer, vol. 127(3), pages 429-441, June.
    10. Samuel H. Baker, 2005. "Why Executive Power Centralizes Government," Public Finance Review, , vol. 33(6), pages 747-766, November.
    11. Paul Pecorino, 2018. "Supermajority rule, the law of 1/n, and government spending: a synthesis," Public Choice, Springer, vol. 175(1), pages 19-36, April.
    12. Leandro De Magalhães & Lucas Ferrero, 2015. "Separation of powers and the tax level in the U.S. states," Southern Economic Journal, John Wiley & Sons, vol. 82(2), pages 598-619, October.
    13. Dong (Dan) Lee & Thomas E. Borcherding, 2006. "Public Choice of Tax and Regulatory Instruments—The Role of Heterogeneity," Public Finance Review, , vol. 34(6), pages 607-636, November.
    14. Dongwon Lee & Dongil Kim & Thomas E. Borcherding, 2013. "Tax Structure and Government Spending: Does the Value-Added Tax Increase the Size of Government?," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(3), pages 541-570, September.
    15. Mahajan, Aseem & Pongou, Roland & Tondji, Jean-Baptiste, 2023. "Supermajority politics: Equilibrium range, policy diversity, utilitarian welfare, and political compromise," European Journal of Operational Research, Elsevier, vol. 307(2), pages 963-974.
    16. Jac C. Heckelman & Keith L. Dougherty, 2010. "Majority Rule versus Supermajority Rules: Their Effects on Narrow and Broad Taxes," Public Finance Review, , vol. 38(6), pages 738-761, November.
    17. Thomas P. Lauth, 2016. "The Other Six: Governors Without The Line-Item Veto," Public Budgeting & Finance, Wiley Blackwell, vol. 36(4), pages 26-49, December.
    18. Tridimas, George & Winer, Stanley L., 2005. "The political economy of government size," European Journal of Political Economy, Elsevier, vol. 21(3), pages 643-666, September.
    19. Pablo T. Spiller, 2003. "The Institutional Foundations of Public Policy: A Transactions Approach with Application to Argentina," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 19(2), pages 281-306, October.
    20. Tyrefors Hinnerich, Björn, 2009. "Do merging local governments free ride on their counterparts when facing boundary reform?," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 721-728, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:soecon:v:80:y:2014:i:3:p:614-632. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.