Separation of Powers and the Budget Process
AbstractWe study budget formation in a model featuring separation of powers. In our model, the legislature designs a budget bill that can include a cap on total spending and earmarked allocations to designated public projects. Each project provides random benefits to one of many interest groups. The legislature can delegate spending decisions to the executive, who can observe the productivity of all projects before choosing which to fund. However, the ruling coalition in the legislature and the executive serve different constituencies, so their interests are not perfectly aligned. We consider settings that differ in terms of the breadth and overlap in the constituencies of the two branches, and associate these with the political systems and circumstances under which they most naturally arise. Earmarks are more likely to occur when the executive serves broad interests, while a binding budget cap arises when the executive%u2019s constituency is more narrow than that of the powerful legislators.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12332.
Date of creation: Jun 2006
Date of revision:
Publication status: published as Grossman, Gene M. & Helpman, Elhanan, 2008. "Separation of powers and the budget process," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 407-425, April.
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Other versions of this item:
- Grossman, Gene & Helpman, Elhanan, 2006. "Separation of Powers and the Budget Process," CEPR Discussion Papers 5745, C.E.P.R. Discussion Papers.
- Gene M. Grossman & Elhanan Helpman, 2006. "Separation of Powers and the Budget Process," Harvard Institute of Economic Research Working Papers 2119, Harvard - Institute of Economic Research.
- H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-09 (All new papers)
- NEP-CBA-2006-07-09 (Central Banking)
- NEP-CDM-2006-07-09 (Collective Decision-Making)
- NEP-PBE-2006-07-09 (Public Economics)
- NEP-POL-2006-07-09 (Positive Political Economics)
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