Political Factors of the Cuts and Surges in Government Spending: The Effects on Old Market Democracies and Post-Communist Countries

The paper is based on the comparative analysis of the episodes of Surges and cuts in spending (old and some new market democracies). We tried to explain surges and cuts by some broadly discussed in the literature factors affecting governments' abilities to balance the budget (such as territorial separatism, the long run domination of the left- or right-wing parties; left or right-wing government etc). Much attention is paid to the phenomenon of universal suffrage, which caused rise to power modern left-wing parties and strong special interest groups within the bureaucracy. Our analysis reaches the following conclusions: First, most political factors are time and case sensitive; however, those factors that depend on universal suffrage consistent throughout all periods and countries. Second, a severe crisis usually opens the window of opportunity that is necessary to cut public expenditure, while the favorable economic conditions stimulate spikes in government spending. Third, the most effective way to curb the instability of public finance is to form a political coalition of nationalists and free market supporters.