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The Composition Of Public Spending And The Nationalization Of Party Systems In Western Europe

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  • Ignacio Lago-Peñas

    ()
    (Pompeu Fabra University. Department of Social and Political Sciences, Barcelona)

  • Santiago Lago-Peñas

    (University of Vigo. Department of Applied Economics, Campus universitario.)

Abstract

Do political institutions shape the structure of public spending? Based on a sample of 141 elections in eighteen Western European countries over the period 1970-1998, this paper shows that governments’ margin of maneuverability to design and implement fiscal policies depends on the level of party linkage or the nationalization of party systems, defined as the extent to which parties are uniformly successful in winning votes across districts. The mechanism behind this argument is that in weakly nationalized countries there are additional transaction costs to change the budget as a consequence of the survival of local parties and interests. Therefore, the composition of public spending is more rigid here than in highly nationalized countries.

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Paper provided by Instituto de Estudios Fiscales in its series Working Papers with number 8-06 Classification-JEL :.

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Handle: RePEc:hpe:wpaper:y:2006:i:8

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Keywords: Electoral system; fiscal policy; linkage; nationalization; party system; public good; transaction costs; transfers.;

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  1. Miguel-Angel López García, 2005. "La vivienda y la reforma fiscal de 1998: un ejercicio de simulación," Hacienda Pública Española, IEF, IEF, vol. 175(4), pages 123-147, december.
  2. Torsten Persson & Guido Tabellini & Francesco Trebbi, 2001. "Electoral Rules and Corruption," CESifo Working Paper Series 416, CESifo Group Munich.
  3. José María Arranz & Carlos García-Serrano, . "¿Qué Ha Sucedido Con La Estabilidad Del Empleo En España?. Un Análisis Desagregado Con Datos De La Epa: 1987-2003(*)," Working Papers, Instituto de Estudios Fiscales 4-04 Classification-JEL :, Instituto de Estudios Fiscales.
  4. Fidel Picos Sánchez, . "Modelo Dual De Irpf Y Equidad: Un Nuevo Enfoque Teórico Y Su Aplicación Al Caso Español," Working Papers, Instituto de Estudios Fiscales 8-04 Classification-JEL :, Instituto de Estudios Fiscales.
  5. Otto, Glenn & Voss, Graham M, 1994. "Public Capital and Private Sector Productivity," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 70(209), pages 121-32, June.
  6. Devarajan, Shantayanan & Swaroop, Vinaya & Heng-fu, Zou, 1996. "The composition of public expenditure and economic growth," Journal of Monetary Economics, Elsevier, Elsevier, vol. 37(2-3), pages 313-344, April.
  7. Alessro Lizzeri & Nicola Persico, . "The Provision of Public Goods Under Alternative Electoral Incentives," Penn CARESS Working Papers, Penn Economics Department b96440ba0bfa06ca550ac40aa, Penn Economics Department.
  8. Ismael Sanz & Francisco J. Vel·zquez, 2004. "The Evolution and Convergence of the Government Expenditure Composition in the OECD Countries," Public Choice, Springer, Springer, vol. 119(1_2), pages 61-72, 04.
  9. Teresa Garcia-Milà & Therese J. McGuire & Robert H. Porter, 1993. "The effect of public capital in state-level production functions reconsidered," Economics Working Papers 36, Department of Economics and Business, Universitat Pompeu Fabra.
  10. Morrison, Catherine J & Schwartz, Amy Ellen, 1996. "Public Infrastructure, Private Input Demand, and Economic Performance in New England Manufacturing," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 14(1), pages 91-101, January.
  11. Falch, Torberg & Rattso, Jorn, 1997. "Political economic determinants of school spending in federal states: Theory and time-series evidence," European Journal of Political Economy, Elsevier, vol. 13(2), pages 299-314, May.
  12. McKelvey, Richard D., 1976. "Intransitivities in multidimensional voting models and some implications for agenda control," Journal of Economic Theory, Elsevier, Elsevier, vol. 12(3), pages 472-482, June.
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